SL Power Player and Business Girl, Anshe Chung
By Dow Jonas
A fierce debate about trust in financial institutions is rocking the business community of SL, pitting SL’s largest land baron, Anshe Chung, said to own SL properties valued at U.S. $200,000,against Nicholas Portocarrero, SL’s largest savings and investment bank owner, reportedly holding more than US $60,000 in resident savings accounts.
In a series of forum posts, Chung has accused Portocarrero of running a Ponzi-style operation promising high yields for depositors but using up new investments to pay existing depositors, a scheme likely to lead to collapse. Such scams are named for Carlo Ponzi, an Italian immigrant to the U.S. in the early 20th century who bilked thousands of people of what was then U.S. $15 million in a double-your-money stamp investment plan. Ultimately, authorities and irate customers caught up with him, he was unable to refund deposits and served time in jail for fraud -- only to emerge later to perpetrate a swamp-land scam.
Portocarrero has blandly denied the charges, and despite recent accusations, has added a feature of LL $100 free for new accounts, while reducing the interest to 0.15 percent interest per day. He says that in the country he lives in (which Anshe has claimed to be in South America, in violation of SL rules against first-life disclosure), he is unable to get a bank account due to excessive regulation and cronyism.
Chung is currently accusing Portocarrero of taking $LL 16 million, currently valued at at about US $63,000 on the LindEx, out of Second Life platform to points unknown, leaving $2 million to cover any withdrawals.
Anshe Chung is a German citizen of Chinese heritage whose real-life name and Paypal account address are known to her customers. In addition to her land sales and island rentals business, she operates a currency exchange business that has absorbed some of the customers from the failure of GOM in the summer. She also owns a percentage of SLExchange.com, a popular third-party catalogue site for purchasing avatar accessories.
No RL name or location is known for Nicholas Portocarrero but by an in-world presence of a year, and consistent payouts on deposits has earned him numerous customers. While his claim to have received $LL 16 million in deposits is unverifiable, several weeks ago, Cyberland Equities, the only company listed on SL’s Metaverse Stock Exchange, reportedly withdrew $LL 3 million in deposits after forums disputes about reputation and financial practices flung on both sides. Cyberland’s directors acknowledge that the high return on their Ginko deposit helped cushion the impact of GOM’s failure on their land business.
“Who’s Winning Losing?” is the title of a typically clever but biased and poorly-spelled forums poll accessed by less than five percent of the SL population -- but an avid and influential percent. Bommerang aptly sums up the community’s concerns with poll options for losers like “Anshe Chung, due to self induced image damage for good of the community,”; “ blaze Spinnaker, due to beleiving in a sinking ship; and “Second Life as a whole, for a 'trust and succeed' ideal seemingly disappearing down a drain.”
In a record-setting day with five threads locked by forums moderator Jeska Linden, SL residents refuse to stop debating the pros and cons of Chung versus Ginko, as many felt driven to support one of the other in SL’s nervous economy.
Meanwhile traffic to Ginko terminals for both deposits and withdrawals appeared normal, and Ansheland continues to sell like hot-cakes especially in the newest sims in the north and on her private islands.
In closing the offending posts, Jeska Linden has invoked an oft-cited TOS rule about not starting threads devoted to one person and engaging in personal attacks.
But residents object that when businesses involving millions of dollars are being traded, the public has a right to demand more transparency.
Currently, Anshe has thrown down a challenge that many forum-watchers have seen as a threat by offering to bail out all existing Ginko depositors while urging Portocarrero to close Ginko, apologize, and explain where the money is -- in the interests of the good of Second Life as a whole. Detractors have rushed to accuse her of a blatant bid to undermine another business and take it over.
Insiders say Anshe has said she has no plans to start a bank, although she is willing to temporarily provide some interest on former Ginko accounts. Analysts have pointed out, however, that Apotheus Silverman, owner of SLEXchange.com where Anshe has part interest, has contemplated in the past adding a banking feature to his new currency exchange. His site already has numerous deposits from shoppers which currently sit in accounts without interest, as many people find it inconvenient to go back inworld from work during their lunchtime shopping sprees to withdraw the few hundred or thousand they have remaining after their catalogue purchases. The notion seems quite plausible that these small depositors, coupled with the larger amounts from content-sellers often calculated in thousands of U.S. dollars, could be lured to add more to SLExchange.com with interest-bearing accounts. Seen in that light, Anshe’s offer of a bail-out seem to some not only to be an altruistic image move, but a shrewd business move.
The acrimonious forum fights have prompted numerous parodies of Anshe’s original post alleging foul play, leading to the sort of racist and sexist baiting the land baroness has weathered before when references to are made to her early SL days of “private entertainment for lonely men”.
Chung questions whether it is right for Ginko to remove so much LL cash from the game and cites her own investments ploughed back into world infrastructure; critics point out that any cashout through LindEx or anshechung.com, both of which have caps on withdrawals, or IGE, are merely providing Lindens for players who want to buy content therefore helping the economy in another way to be more liquid. One practice reduces inflation; the other increases, say some commentators.
Any sudden cashout, such as began to happen with GOM last summer, however, destabilizes the fragile toy-like economy of SL, with it’s US $40,000-60,000 US per day handled by no more than 4,000 people logged on at any one time.
Many finance-watchers have been disturbed to find the Lindens taking a neutral position on the financial scandals. In a November 17 announcement, Linden Lab’s attorney Ginsu Linden said, “We applaud the continued innovation and entrepreneurship of our community....please keep in mind that Linden Lab does not own, operate or insure these [financial] services.”
Travis Lambert, one of SL’s most trusted figures for his work at the newbie Shelter, announced he had withdrawn his account of 75 percent of the Shelter’s donated funds from Ginko, while keeping in 10 percent.
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