Back from the Holidays.

Here we go, back to work. I am seeing a lot of good potential for the SL economy this coming year. User rates are rising. The problem we will continue to face is a lack of sincere honesty and regulation in the markets with a Linden Lab nervous about playing Global Cop after a couple of courtroom fiascoes. I continue to expect that land will stay a relatively flat market with land providers continuing to up supply with the rising user rate. The great concern is will it out-pace the rate of user acquisition where the users can be valid participants in the land market. What does this mean? Well, basically we need more users with money wanting to buy land and merchandise. I look at SL as virtual tourism, if you don't have the flow, you don't have the dough.

Merry Christmas.

I will be notably absent until approximately the 28th, at which point I'll probably begin a review of VSTEX ipos.

Here's wishing you and yours a very Merry Christmas. Peace on Earth, good will to all. Make sure you remember the true reason for the season does not come with a bow. Hold your family close, keep them warm, and count your gifts from God which will vastly outnumber any quantity of packages any person could purchase. (Especially if you include each star or grain of sand in that count.)

IPO Review for the Ancapistan Exchange.

A prior commenter brought to my attention an observation about ACE, that many of the IPOs appeared to them to be fairly untested and the standards of the exchange to be at risk. That said, the asked me to comment on my thoughts of the companies, their prospects, and their business propositions. That said, I am now going to begin an alphabetical review of the IPOs currently listed on that exchange at this time.

Disclosure: As policy, DGD buys a small amount of all ipos, larger amounts of promising IPOs, and day trades the one that it buys small amounts of. Therefore, DGD already has at least a minimal interest in all these companies. However, I have never let that skew my presentation of judgment to the public.

In alphabetical order they are:

ACE:Prospectus. Value Proposition: Exchange operations.

Shares to issue publicly	7,700,000
IPO shares sold to date	816,565
IPO shares remaining	6,883,435
Total shares in company	16,000,000

ACE is an offering of ownership in the exchange operations themselves. It is not uncommon for stock exchanges to raise funds initially, the purpose of the funds is to establish a bank on which trading can take place and to allow for ease of deposits and withdraws of new clients as well as to cover some moderate expenses the exchange may witness during the initial stages of operation. The IPO is well written and recognizes the weakness in the exchange market with 4 pre-established existing competitor exchanges. Typically, a well managed exchange is a stable investment. The risk is that poor management will allow anyone access to the market's capitol, subjecting it and shareholders to fraud that could potentially break the value of hte exchange itself and drive its clients away. Though ACE is a strong offer being the operations of the exchange itself whose revenues would be obvious to the public in the form of the commisions on trading, it could be undermined by the operations and management of its landlord BNT whose CEO, Intlibber Brautigan, co-owns both ACE and BNT. Proper management, however, could bring both companies to extraordinary prosperity since BNT has a large asset base. Time will tell where these futures will go but BNT has greater freedom of action trading on its own exchange. However, with greater power and ability comes greater responsibility. Abuse and mismanagement or over-reaching.. can be lethal. Slow and steady is the course to progress.

BAM:Prospectus: Value Proposition: Acquisitions And Mergers, rebuilding broken companies after buying them out.

Shares to issue publicly	1,000,000
IPO shares sold to date	25,981
IPO shares remaining	974,019
Total shares in company	2,200,000

Travis Ristow is the CEO of this company and in my eyes the CEO is and makes the company in Second Life. He's been a friend of mine and pretty reliable when it comes to the operations of his existing company on ISE, BCX Bank. DGD also owns property on one of his estates and it turns a steady profit running a vendor booth next to his banking operations. Travis seems pretty business savvy, but a business in Acquisitions and Mergers within Second Life exposes itself to a lot of risk. At the same time, there is also a significant amount of room for reward. Time will tell if this venture is profitable, but there is potential here. It all depends on how the risk is managed and that is true about any investment firm. I can't help feel slightly skeptical though for business operators who have more than one operation listed and their ability to keep financing separate. You would imagine they could use the strategy for the new business for their existing operations. That said, I still think this corporation may have a future if it is executed on correctly.

FWD:Prospectus: Value Proposition: Content and Marketing Information provider.

Shares to issue publicly	800,000
IPO shares sold to date	12,597
IPO shares remaining	787,403
Total shares in company	2,000,000

I do not know much about the insiders of this particular company, Never met the CEO or any of their staff in second life. This worries me. I see a lot of folks around the SL Finance communities and I invest with only who I trust or who I've seen running existing business operations and am aware of their ability to manage their operations. That said, I can't make a judgment on this company much based on its leadership. However, I can say that the value proposition is potentially viable. The idea of providing a "Newbie Haven" in order to exploit marketing contacts and collect data as well as to attract vendors is far from uncommon in Second Life. The real question about this company is how will it distinguish itself from its many other competitors? What will make it succeed? How motivated are the executives? I've only seen a few operations like this last any amount of time and I'm very skeptical about its prospects, but at the same time I feel compelled to give people I do not know an opportunity to prove themselves. This investment has a significant risk, versus reward factor and may not be for the faint of heart.

OIG: Prospectus: Value Proposition: Various investments including those in real life.

Shares to issue publicly	7,000,000
IPO shares sold to date	61,619
IPO shares remaining	6,938,381
Total shares in company	12,000,000

Basing a company on RL investments has repeatedly proven catastrophic in Second Life. DGD has a policy of avoiding them because of this, and because of the potential for basing your security's performance on RL securities risks breaching REAL UNITED STATES SECURITIES LAWS which clearly state that any asset that is "fungible" is no longer just a game, but a real.. trading security. I cannot trade my DGD stock for cash at the cashier's counter or barter it for food. I could however, take my ford stock and theoretically sign it into my grocer's name for food if I have the certificate and they're willing to accept that trade. That said, I would not be surprised if this company is not shut down.. or does not even get off the ground. If it does, I'll day trade it, but won't likely own much of it for fear of the U.S. Attorney General's office shutting it down and I losing all linden value. Also, the biggest bank collapse in SL history (Ginko Bank) resulted from a Brazilian that was trying to make revenues from his deposits in RL securities. It amazes me that this CEO account is listed as being registered from Brazil. Same person? In SL, how do you know? I'd advise most investors to avoid this issue like the plague unless you're just day trading. Long term positions are at significant risk of catastrophic loss.

OMG: Prospectus:

Shares to issue publicly	1,200,000
IPO shares sold to date	154,887
IPO shares remaining	1,045,113
Total shares in company	3,000,000

This prospectus was generally okay with me as there are many successful clothing entities in SL, just depends on the talent of the artist. This is what changed everything:

Use of Capital

Use of Start-up Capital
L$700,000 - Labor for designing clothes *$2,777 usd*
L$350,000 - Strong Marketing Campaign for months 1-6
L$150,000 - Misc. costs (land tier, events, prizes/camping, etc)

If anyone tell me why in Second Life anyone should be paid up front $2,777 us dollars for the design of clothing when I can make a sweatshirt for free, I'll reverse my decision that this is a scam.

Shortened Product line description:
Lines of clothing equalling around 140-150 different outfits.

So they're charging shareholders 20 USD per outfit that may, or may not sell. I'll let the investors make the decision on this one, it could pay out, but I don't anticipating that recapping its initial investment value any time soon especially with the added costs listed that are not one time, but sustained long term costs.

"Someone pay me 2777, I'll make 140-150 lines of clothes for 2777!!! And then put them in shops for you.. and they'll sit there.. and they'll stare at you.. and they'll stare at you.. and you'll own it all! And you'll have to pay for its rental spaces each month so you won't really make that much money on it. Oh, and thanks for the 2777 USD!"

Sorry. Have to mock it just a little.

The use of capital needs greatly expanded upon and I think investors deserve more.

Summary in response to the comment here by an anonymous user:

Is ACE rushing IPOs out the door for growth? Out of these 5, I'd strongly question 2, and have some clarifications to ask of a third. I'd say, yes they are pushing things a bit and allowing their standards to slip? Yes. I believe they are. If they want to be anything as successful as their predecessor exchanges they must be more selective. In my time allowing IPOs at AVIX (what CAPEX was before it was purchased). I eliminated at minimum 90% of all IPO proposals. Of the few listed on CAPEX now, several were not even approved on my watch and only one company has ever failed that I allowed to list, (CYB). Skepticism is healthy, an exchange showing a lack of it, is putting themselves and their clients at significant risk of permanent, bad will and loss.

Thank you for your inquiry Anonymous. Anyone whose corporation is listed in this blog who would like to clarify their position of their company in the comments, please feel free to do so. We all know I am not a Nazi, I encourage free speech 100% so long as it is constructive and non-derogatory dialogs.

RLX of the WSE is dead.

Another company on WSE, which continues to trade, has collapsed within 4 months of opening. RLX no longer holds any land, It's CEO has been absent for a long period with the last posting date before the most recent December announcement being the only since October. It has no means of income. Company communications are practically non-existent. Most employees have moved on. If you have investments in this stock; selling now will save your shares from being WTF'd to 1/4 value possibly even less.

I come to this conclusion after talking to former employees, researching the CEO's landmarks to the land holdings for RLX in world and researching the financial details of the company which have not been updated since October. It is possible the company may be reorganized, but I've not seen this occur often on the WSE.

Additionally, another symptom of decay is the state of the maintenance of the company's main web page. It does not appear to have been updated or posted upon since August, which is the very month the company listed.

Interestingly enough, the WTF fund of the WSE actually owns 20% of this corporation. I am relaying this information to WSE administrators and requesting an investigation.

DGD expands operations

It's been a while since I've tried a land venture in the SL markets because land has been rough, but I found a pretty hopping club next to some cheap land today, called Club Wolf.

The experiment is inexpensive, 1366 to buy the land to get started, 2611/month to maintain if all goes well.

If you're interested in seeing DGD's new startup location, just drop by Mark Edge.

The shop's already set up and ready to rent!

Happy Holidays Everyone! Merry Chrstimas, Happy New Year!

There's not much to say about the market this part of the year as it tends to get slow and sluggish as not to many people bother with their investments or tracking the market around the holidays.. at least, I don't. However, there's a lot to be said about the WSE which continues to generate controversy about the numbers that it posts concerning its own data and competitive stature.

As Aldon Hyne has so clearly pointed out, there's little chance that WSE now contains over 90% of the market volume. There's just too much trading on the other exchanges. I am concerned that the Dreamland Stock Exchange(DSE) may no longer be a valid investing exchange for Second Life. If they cannot get their PED to Linden transfer tool working once again, then there would be no way to buy some of the companies listed on their exchange or to convert PED investments into credit that would be usable in the Second Life world. Contacts with Support ACS of Anshe Chung Studios and the Dreamland Estate have resulted in consistent apologies for the lack of functionality and a promise for a return to normalcy as soon as can be provided. I have no choice but to wait patiently to see if the matter resolves, but hopefully they've learned from this and it's one more vulnerability they need not worry about being subject to in the future. I hope they're being honest with me, because I don't think Anshe could afford verifiable bad press concerning in game business ethics but would reap bounty from verifiable good will and solid business practices. The Support ACS personnel were even kind enough to offer to contact me soon as they know the converter was functional once more.

Intlibber's BNTF also continues to have me concerned. Their atms are consistently off and their web page is now employee access only. It's a very disappointing situation as I thought they would be able to maintain a far more stable interface for their clients given the size of their other operations. I mean, if we cannot trust BNTF, how do we trust ACE? They're owned and operated by the same person. I'm willing to be patient, but the question is, how patient must a depositor be for reliable account access. This is not the first time the bank and exchange combination above has had "interface problems." Sorry I'm so critical, Intlibber, my old friend; but I have to keep to the observance of the truth of the matter and truth is that this pattern is very worrisome to anyone who has funds in your institutions. Feel free to say something in comments about whatever progress or plans you have to remedy the situation to your defense if you like. Their web page is still down as of the posting of this blog, I will be checking their atms again later today. At this point, I have no intention of withdrawing from either institution; I am simply on edge.

I am hoping the holidays will start an influx of funds into the markets of Second Life and that part of those funds may see their way to the exchanges. The economy of Second Life is, after all, simply a derivative of the extra spending money of all the people who use it around the globe. Most users are probably from North America and the U.S. So it leaves hope for a slight boom of profitability.

Congratulations to CAPEX on exceeding the other exchanges in Market Volume dominance according to independently observed measures. Let us hope all exchanges continue to see growth, strength, and a continuing push towards good will towards investors.

Note to self, Login before you blog:

[12:14] Nancy ACS: (Saved Fri Dec 14 21:31:45 2007) Hello:)
[12:14] Nancy ACS: (Saved Fri Dec 14 21:54:26 2007) You can transfer PED into L$ in our website now
[12:14] Nancy ACS: (Saved Fri Dec 14 21:54:27 2007) :-)

DSE on the ball. Go Anshe? I feel so wierd saying that.

Of management, exchanges, and risk.

I've been quietly pondering something the past few days. The risk of exchanges are directly tied to risk of management. Many exchanges have leaders who have a strong ideological sentiment. Sometimes these sentiments disagree and verbal barbs are traded. The problem is that over-asserting moral authority can be as devastating as letting crooks go. There's a right and a wrong way to do everything..

Do exchange heads have a right to assert their ideology? Doing so can potentially put their own exchange and assets at risk if third parties, that mainly being Linden Lab disagrees with the intent of the message and thus exposes their investors to additional potential risk.

A lot of recent argument has risen over the products SL Capex's real life company produces and the legal risks involved in that product. Some assert the Sports Arbitrage product is legal, others illegal. Though the product clearly does not list itself as a gambling instrument, its links to gambling can easily be seen. If it's not a matter decided in the courts because it has no legal grounds, does it become a moral issue? Do exchanges have a right to claim moral authority?

To me, the exchanges have been and always will be an instrument. The only real measure of "morality" is whether or not they operate a system of fair and equitable trading. To me, anything outside is external to the game; the content of real courts and greater powers. Besides, games of chance can be moral if not abused and simply a form of entertainment in some jurisdictions. The problem is the moral fabric of society is so weak that in most cases it must be illegal or severe consequences result because addictions are not overcome. Linden Labs has dictated that inside their world all gambling is illegal, but the applications in question have nothing to do with second life and in fact are sold for "information purposes" only according to the terms of service.

Do the heads of exchanges have the right to take such moral risks with their operations given they have such a great power and sway over the operation of the platform on which so many investor's investments ride?

To me the answer to all the above questions, are no.. not really. But I don't have much of a choice in the matter. Exchange heads will continue to attempt to assert "moral authority" due to competition. Exchange heads will likely to continue to sell their products despite what I may say perhaps.. or perhaps not.. to legal regret and potentially market wide regret. Personally, I don't see much coming of this discussion that will benefit market investors at all on any exchange. All I see is greater risks, even as more information is uncovered and more rhetoric is thrown about.

SL CAPEX stealing the show.

It's officially up over 20% from the past 30 days and no one else is even close to the incline. The real question, is this a long term gain? Are we seeing a capitol migration from other less savory markets or is this just a statistical burp? Time will tell. Without some solid foundations I can't begin to predict the future, but consistent dividends on many CAPEX issues may be what's the driving force in this market.

The Great Stage (the media). The War of Words. Don't be Duped.

This entire post is basically in response to this article and the basic fact that ACE and SLCAPEX are once again involved in a war for the hearts and minds of the public.

Unless you're on the inside and know something the rest of us do not, this is an examination of what you need to know about the exchanges. Lets review the facts.

1. Both exchange operators have support line access to Linden authorities. If they suspected anything that could be proven either exchange could/would have been shut down by now.

2. It's very rare for any accusations thrown at any particular exchange to have any evidence, besides a hacked up blog or sl log, to throw against the other.

3. The exchanges are enhancements to the game Second Life, they are market simulations that operate based upon businesses operating within the virtual environment and operated by third parties of which few know anything about (unless investigated) and could fail at any day.. including second life itself.

I have consistently operated under these assumptions with my fund. You should to if you want to know what's safe for your virtual wallet.

The solution to a market where risk is maximized and returns are potentially robust but also spread thin, is obviously diversification. I encourage you to ignore the press unless there's a bit more to it than snippets of blogs unless you have someone's trust. Ignore the reckless claims of giants with only the attractiveness of their trading platform's interest at stake. Investigate the companies you invest in, make sure they're real and not just digits on a board. Be wary of the ones making frivolous claims, it's often a sign of desperation and may in fact be the clearest way to decipher the risk of any individual institution.

That said, Market Dragon signing off, happy holidays all.

11/30/07 Market Report

Slow Growth amid bank carnage.

The second life equity markets seem to be stronger, even after the banking disasters. This could be because the bank that did actually fail was not directly related to the equity section of the SL Financial Community. The bank that was saved, Lindsay and Luke Bank, could have easily tanked the entire market if Linden Lab had not stepped in. I think that's the big story for this month also, Linden Lab actually moved to protect a failing institution. It makes all bank stocks a measure of a degree safer so long as you're sure their CEO is on the ball because it shows they can get help with enough persistence, diligence, and probably if they can show Linden Lab their paperwork.

That said, before depositing or investing with any bank, make sure you test their atms thoroughly to make sure they're not exposing your money. Something as simple as the withdrawing of a negative sum could tell you worlds about your levels of risk at the institution in question.

This month most exchanges have been moving relatively sluggishly. The 30 day chart on the WSE looks like the pulse of a dead man with only a slightly positive jog of 5%* which may only be temporary in realization and just by chance.. up while I'm writing this report. CAPEX has been showing some strength, it appears to be on an upward jog and has inclined by 10%* for this past 30 day period. The International Stock Exchange is in pain, losing over 18%* for the past 30 days. It makes me wonder what's going on over there that has investors in such a lackluster mood. My assumption is there was that the prices appeared briefly inflated on the ISE which is usually symptomatic of a large manipulating investor behind the scenes. That said, prices may have normalized and it may be time to evaluate for potential purchases. ACE is starting to pick up steam, offering 3 new ipos in addition to its current listing. The same concerns apply to this as with VSTEX's rapid expansion. VSTEX's index has been rising also, so most markets are flat or higher. I'd say that constitutes a pretty reasonable month. I hope they're dotting their I's and crossing their T's in security. The Dreamland Stock Exchange has also been its usual sluggish self with low volumes and mild price changes.

* % in market value changes are courtesy of http://www.slquotes.com

Launderers gone riot.

Something interesting about Dreamland Exchange, its currency converter from Entropian PED to SL Linden has been temporarily and perhaps permanently shut down due to an exploitation by money launderers. Any investment that is in PED sums is currently at risk of not being extractable within Second Life. I've been assured they're working on a resolution of this issue with the Lab and Entropian authorities. That said, it could also explain some of the lackluster behavior of the exchange in recent days. Until the shut down, I was pondering actually looking at the banks within Entropia as investment venues to help drive more revenues.

Reserved optimism.

So am I bear or bull on this coming month? Well, there's a lot of new strengths showing in the markets including a market element which has behaved in an unexpected and positive manner. I guess you could say I'm leaning towards the bull side of the fence a little but my constant conservatism inhibits me from taking aggressive action until I can see real strength. I am looking at the new IPOs on all the exchanges carefully and adding a small sum of each to my portfolio so that they can be traded and profited from.

.

The Drama from italy continues.

I've no longer access to their website, login no longer functions.. but this is the google translated text of their new main page:

###################################################################

Consequently, the occurrence of unexpected situations and not plannable, we absolutely unintended and therefore independent of our intentions BISL temporarily suspending its activities. The over-mentioned reasons relate in particular the priority by our staff to solve the problems posed to us by Linden Lab's own initiative and arbitrarily proceeded to withdraw large amounts of Linden dollars by our avatar claiming justification at all matching truth, specifically purchases NEVER occurred lindens through online auction sites. This has been added to the suspension of some of our avatar from Second Life therefore now unusable because, we believe, reports of a third party. Pending resolve the incident Bisl will resistuzione manual part of the sum from us in committing deposit within a reasonable time, in case the problems with LL were extremely long, to move closer to 100% of the total hoping that Linden Lab allows us, if, to use our people at least to sell the land we owned. All this with the will to demonstrate once again our good faith even with the awareness not to be forced also, and above all according to what is expressed in, and used "notecard" present in our ATM at the acceptance of our services, Notecard here for completeness of information included in his "General": GENERAL • Bank of Italy SL allows users of Second Life to open current accounts with a daily interest that can earn on their savings rather than leave them to stop lying in their account. Bank of Italy SL takes the total deposit and reinveste or to various entities and persons in order to obtain the needed to pay interest daily. We always keep a reserve exist in "linden dollars" to allow customers to withdraw from their accounts most often instantly, sometimes after a few minutes per hour. We must clearly underscore that, as a result of interest payments per day, the Bank of Italy SL has the absolute need to capitalize on the "money" deposited. By virtue of the above, therefore, we can not guarantee that payments will be made in quickly, it being our absolute commitment to pursuing this goal. This type of activity is obviously subject to obvious risk. Those accounts are not insured in any way by any government, as in the case of many current accounts in real life, as we can not guarantee not to ever go into a bank route. Certainly Bank of Italy SL does not want this and we will strive to ensure an always solid and reliable, but is fair and honest to be aware of the risks described above. We apologize for any inconvenience hoping in more quickly as possible to resume our activities. Bisl Staff

##################################################################

Unedited. Looks like my decision to contact Linden Labs regarding the vulnerability lead to some more research on the part of the Lab into how this institution operated with unexpected results. I don't know who's telling the truth, so I'm not going to step into the conflict as a banner carrier for the Lab or for Banca D Italia. What I will say is that extremely high returns on interest have to come from somewhere and usually it's not entirely legitimate.

New Blog Functionality! Index Charts.

This is just a thread to allow my visitors to sound off on their thoughts of the appearances of the Indices on this blog. I'm trying to find a DSE index, but have had no luck yet. Also if you have any other comments on the appearance or the structure of the blog that you'd like to voice an opinion on, feel free to do so. I'm always out to improve this interface for the general SL Finance market and am trying to make as many resources available as possible without introducing an excess of clutter.

LL moves to save LNL? LL waking up finally? VSTEX growth rate dangerous? WSE wising up?

I had to write about this, because if it's true.. and I stress the if, then it's the best news ever to hit Second Life financial sectors. Lindsay Druart, CEO of LNL, has claimed that all of the funds lost in the banking heist incident has been recovered through Linden Labs (LL).. that the bank has in fact been compensated for the massive hack/fraud attempt.

If this is true it would be the first time I've ever heard of Linden Labs stepping in to help any player involving third party software recover funds due to an abuse or an exploit, particularly on this scale. It makes me wonder why when so many of the other banks have gone down in the past due to similar issues, they had not stepped in. It also is such good news that my speculative nature makes me have to second guess my trust of the claimant, again. I wish there was a direct method of verifying the claim as if so I'm sure a substantiated proof of this would radically impact the Second Life markets in a positive manner. In the past, investors large or small had absolutely no recourse when something went horribly wrong.

That said, I've not noticed significant market activity, that couldn't be associated with insiders on any issue on CAPEX or any other exchange this week. It's actually been rather slow. That said, I'm anticipating business as usual as the holidays approach baring new product ideas or new news. On the other hand VSTEX has seen a flurry of new offers that makes me wonder if the community standards protocols are going to be effective in preventing fraud on that exchange.

When I headed an exchange as AVIX's operations officer, I found that 90% of all proposals were either bad, or fraudulent in nature. Even the ones that passed the screening, of them, 1 went bad.. and there were about 8 other corps that made it through the screening. The bad one was CYB, which is no longer listed on CAPEX. I've been accused in the past of granting bias for the CEO of CYB because their avatar was a dragon lady, which is ridiculous.. given I'm married and that'd be the same premise as granting favors to someone else who is also the same rl ethnicity, especially when the person behind the PC happens to be a male it makes the premise even more rediculous. I knew quite a bit about that CEO, but the parties who make the accusations have no idea of the levels of precaution I took to attempt to protect the investors of the old AVIX exchange. My interrogations tended to be rigorous. I required a method of RL identification. Even Lindsay Druart herself was verified by me at one point, although I questioned her twin exchange listings on WSE and CAPEX. I verified her by tracing her internet account back to its listing source using WHOIS.net functionalities and checking her domain's ownership on several of her internet sites. Some of it can be faked, but it really depends on the ISP and how they do their listings. I no longer trust GoDaddy, anyone can get an account there it seems regardless of proof of identity. I kept my methods secret at the time because I didn't want a potential fraudster to have the opportunity to prepare themselves for interrogation and the best remote background search I could sustain. I never got more adventurous than remote verification because I've always been concerned that anything more may actually be a breach in Linden Labs privacy policy/terms of service and that would end my short career in second life finance.

With that tangent done, back to my point, any exchange witnessing explosive growth will more than likely experience higher than comparative rates of fraud for more cautious exchanges. This has proven true in the WSE/CAPEX comparison. WSE has delisted many companies that have failed or proven fraudulent enterprises.. you just wouldn't be able to tell it because delisting usually means a complete wipe of all history of that corporation's existence. Their monthly rate of delisting has also been higher over the course of history. I'm expecting their rates to fall though. The criteria used on WSE seems to be tightening and I'm hoping that will result in improved performance, especially in the area of fraud deterrence.

Banca D Italia has not paid interest on my account since 11/20/2007, the date I isolated their programming issue. I'm very concerned someone got to them first as, why else would the interest accumulation halt? Thus far withdrawing and depositing has not been effected, but this activity is strange and so far messaging to them via their website and IMs has gone without a response. The day I reported the issue, the owner of the bank said they should be able to isolate any strange transactions and the programming problems with the atm were fixed as far as I could tell. I'm hoping they've not mistakenly pegged their savior's account as an aggressor in their search to isolate any questionable transactions, that'd be a real pity if such ingratitude were mistakenly displayed. I'd hate to have to stop using their bank, the fund's money must work.

Dreamland's Currency Convertor abused on day of bank heist.

I just discovered from talking to a support associate for ACS, after checking on my dreamland account, that the currency converter for PED to linden has been shut down on a temporary basis while a security issue is addressed. Someone moved a lot of money through their currency conversion utility The alleged laundering occurred approximately the same day as the massive SL bank heists. Although DSE was not subject to the same exploits as I've seen at many institutions, it brings to light another problem.

Banks and exchanges with currency conversion utilities; whether it be one game currency to another or game currency to dollar, face many more complications and should be dealt with carefully. If the institutions in question are not properly formatted for use there is a possibility of exploitation for illegal means that could render the institution itself liable. This would have the potential of destroying that institution, so please.. be careful where you invest. I am sure Dreamland will fix this problem and be back up and running in little time. They're all very professional and this is a problem I'm sure that was not anticipated. The support associate told me they were currently in talks with Linden Labs and Entropia in an attempt to solve the problem and nail the perps.

Narissa falls to death, obviously did not consult market dragon on real world physics.

What's with dragons dieing sheer stupidly these days? I mean, sure, she never existed in reality before to have experience with real physics, but the brute force weight of her and the bending metal should have been a hint. Obviously she did not cross worlds to second life to consult the Market Dragon, her biggest mistake. I mean, just look at my profile. I perch on NY city skyscrapers with ease and majesty and do not fall to my doom.

That said, my consultations had nothing to do with Narissa's death and it should not reflect any liability or future long term peformance of Dragon Global Diversified. This dragon obeys the laws of physics; real, virtual, or fantastic. This should not become a stereotype for the species.

Oh and my beloved Koudoawaia Menatep and I loved the movie, if you haven't really had time yet and you're a couple who love sickeningly romantic films that you lick (or kiss to) all night, I suggest you go to see Disney's "Enchanted".

*drops one last post on his way out* Xavier Mohr of SLR resigns.

This topic came up on the general forums of CAPEX. The first post was an expression of disappointment with the resignation of Xavier Mohr of SLR after such a short time, this was my response:

When I look to invest I usually ask the CEO if they're putting in a 1 year or more commitment to their firm and I also ask them for how they'd plan a closure or transition. Privately, I've known that Xavier has been looking for a way to minimize his in world presence, his interest has come and gone with time and I know that SLR has been setting heavy on his conscience, that said, I expected this and planned my investments based on it.

SL is not like real world markets, the corps are groups of people pretty much pooled in an interest of making a profit if and however they can. Kind of like the clans on World of Warcraft, but using a more up-to-date stylization of financial structuring to help control ownership. In my eyes, it's a very convenient alternative to Second Life group setups. That said, it's wise to know your corp's leadership, to not just invest based on numbers or hearsay, but to actually talk to them and get to know them and their goals. My investors will tell you, my mind is open to picking, that's why many got on board with me to begin with.

That said, it's another case of, "If you do your homework, you know what you get, and if you don't.. it's not the CEO's fault." He can't come out and just say, "Oh, I'm thinking of resigning." When he has not yet made his decision as it'd be abandonment of his fiduciary duty and result in a direct stock crash right away and could be grounds for accusations of manipulation. It is only after the decision has been finalized that it could be announced without concern for market ethics.

Besides, I think it's more than possible to find someone just as passionate about growing SLR. It's just a matter of being picky and finding someone excited about second life media who has the talents and the skills. It won't be easy, but it can be done.

You'll only be disappointed by a stock you do not research well enough to understand its future.

Also, to those would-be CEOs. Unless you're a scam, it's not easy. Responsibility now binds you to the game. It's not just entertainment any longer, it's also a kind of a job. That can kill the joy for some folks, for me it's fun... driving.. a lil stressful at times but it's also what I thrive on. I really enjoy running DGD. Maybe it's just because I've been doing better than even I expected. Anyhow, don't rush into it, give it a lot of consideration. Not everyone will do good in business.. and the good times and the bad will affect your operations but you have to stick it out for shareholders through the bad times. I've had a number of times things looked sour for DGD. Ginko, The Bank.. we had money in each. Fortunately, close monitoring and vigilance saved the company from those disasters.

And this is why more than anything SL markets are still just part of a game. There's an entertainment factor involved. The CEO must want to run their corp or.. they may just say "I don't like SL anymore" and they're gone. Hopefully you're in a corp that has a shut down plan or a COB (continuity of business) plan that allows for an easy resolution. I know Xavier's had one for a while and it simply involves Arbitrage Wise of CAPEX picking up the corp for a while as they find new administration. That said, I think it's very wise for all investors to keep in mind the context of their investment. SL is a game, it is a virtual world, not a real secondary world that people try to tout it to be. If it were a real secondary world, you could not log out. You would not be able to grow disinterested. The greatest casualty cause for second life interest is probably ceo growing disinterest in THE GAME.... that said, happy Thanksgiving and careful, happy investing.

People get upset because I was running an exchange in second life, yet still called it a game. Listen folks, people blow thousands of dollars in the game industry daily. I call something what it is, I do not lie, I do not distort and try to make something out for more than it is in order to get your dollars in my corp or in the exchange it sits on. I will tell you the blunt truth as I know it and I always will. Just because there's a lot of money in it, doesn't make it real. How much have you invested in your home entertainment console? Is its media content real, or is it still media? Will Mario be jumping out of your WII any time soon? (Okay that may eventually happen with holograms, but it hasn't yet. Who knows what they have up their sleeves over there.) But I think many of you have gotten my point. And yes, when I started DGD, I asked investors to invest in a game world corporation. It is not a real company. I am not legally obligated to them in any way, but I am obligated by trust and that trust won't be violated. I don't want to ruin any one's fun. I actually have a moral spine unlike some of the crooks who do participate in some of these markets. I will call for accountability where none is present even if people do not like me doing so. Because even if it's not a regulated environment, even if it is not the real world, I still believe in the strength of the human spirit, integrity, honesty, and the values which are the better side of our species even if the vast majority of the population does not and even if I do parade around in the game as a dragon.

Happy Holidays!

The dragon will be out of the office starting later today and will not be back until the following Saturday. He will be checking on business time to time, but will not be very active. Please do not mistake his lack of presence for abandonment of his duties :-) as so many do.

I hope everyone in the United States has a Happy Thanksgiving Holiday and hope to be back on task soon. This is the Market Dragon.. signing out for now.

Modest sized exchange merger being attempted.

A proposal has been made by CAPEX and BBX to take over ISE. This would be one of very few mergers of stock exchanges set in Second Life. The exchanges often branch, rarely converge. To get all the juicy details on the merger please look here to read the details of the tender offer. The issues on both exchanges are strong, but the number of issues is not as great compared to other exchanges, say the WSE and may lend a stronger competitive advantage to the merged entity. Reports are coming out that CAPEX is already bypassing the WSE on daily activity despite its numerous outstanding stock issues. For more details on that story check out this article in SL Reports written by friend and colleague Xavier Mohr.

Reasons for the change in traffic flow are attributed to a range of causes from investor confidence being low in the WSE due to the Ginko Bond Scandal to its numerous failed companies which have been renditioned to the mysterious symbol (RMV). Shaun Altman has cornered the market on Ginko Preferred Bond info, so you should probably read his blog here if you want details on that. Needless to say, it's a mess.

SL Mythbusters: The negative withdraw test. Sloppy coding at fault? White hat at work.

I heard part of the reason some banks were hit was sloppy coding. I went around and began to test atms to see if they were vulnerable to negative withdraws. This is just one of the rumors about how I've heard banks have been hacked.. so I though it'd be fun to test with 1 linden amounts. Here's the results:

1. BCX openly mocks you for not being sane when you try to withdraw -1.
2. ACE does not allow it. Ignores you.
3. SLIB does not allow it. Ignores you.
4. ISE removes the negative and simply takes the absolute value of the amount from your account.
5. DSE states you are using the wrong amount.
6. VSTEX reports that you have insufficient funds.
7. JTF/CAPEX ignores your request
8. BNTF Ignores your request.
9. EDGE ignores your request.
10. Banca Di Italia: Secured as of 1:33 PM est.
11. SL Bank ignores negative withraw requests.
12. WSE/One Bank only allows the use of keypad entry for withdraws and does not allow the use of negative integers.

I intend to con tinue my testing to other institutions, these are the results to date.

A vulnerability has been confirmed, the name of the bank has not been released to protect the bank as it works to repair its atms.

Currently sitting in Kremer waiting on the Governance team.. yay. Even after all these warnings the past few days, some banks still leave themselves exposed.

Update: 1:09 PM est, 10:09 AM slt: The vulnerable bank has been notified of its exposure. The representative told me they would work on resolution immediately and that the transactions can be tracked and are reversible if any have occured that are fraudulent.

Linden Lab just removed the exposed ATM, so I can release the name of the bank now. Banca D Italia's programming was exposed to this exploit. Theoretically, I just saved all of Freedom Italy.

When Banca D Italia loads their new atm, I will retest it once again to ensure the loophole has been closed and update this blog.

The loophole was repaired, now added to list of secured banks.

SL Financial institutions taking massive hit.

I'm getting so much content and the market's getting so hot on this news I've had to start another post. Reports are that the attacks came in two waves, one in the morning and one in the afternoon.

Victims known to date:

1. LNL - Lindsay Druart: 3.2 million in deposits affected. LNL has recovered from the first attack. Recovery amounts are now detailed in the comments section.
2. SLIB - Tyrian Carmillo: Reporting no impact with no changes to operations. Security coding minimized damage and the CEO reported the only real loss was time verifying the attacks failed.
3. Royal Bank - Christopher Whitfield: Managed to recover the impact of the first attack from Linden Labs, second attack is still pending. Estimated impact still remaining $L160,000
4. Giovinazzo - Individual Source, Unconfirmed .. impact measure unverified.
5. Second Life Business Bank (SLBB) - Individual Source, Unconfirmed.. impact measure unverified.

Banks surviving the incident with no attacks seen/reported:
1. JTF/CAPEX: Arbitrage Wise: no apparent attack.
2. Edge: Salas Steinbeck: reports no apparent attack.
3. BCX: Travis Ristow: Attack discovered, but no effect. They were testing security. Utilizes LL Risk API.
4. BNTF/ACE: Intlibber Brautigan: no apparent attack.
5. Crystal Springs Land & Loan: Skip Oceanlane: no apparent attack.

Supposed victim count reported by multiple independent sources: 4 or more institutions.

These are confessed victims of the vulnerability and so far no others have been named directly.

I'm not sure even that all the banks are aware as to the level of damage that may have yet been done to them if any so I have reported the incident to the heads of other institutions to make sure they are aware of the event and are checking on their own internal operations. That said, I'd encourage all depositors to be patient with your institution as, even if your money is still available, it may not all be there and there's a significant chance that a broad based panic will result in catastrophic bank collapses.

The information I collected from verified sources, associated with the bank in question, will be marked as verified. This is data I know to be true based on their accounts/claims and their representation of the measure by which they have been affected. Unconfirmed accounts come from second hand individual sources and may or may not be accurate, I will be contacting these institutions if I can in order to find out the validity of the claims.

If you are an SL Bank and want to report the status of your bank in relation to this incident, please fill in the comments section.

With the multiplicity of banks that are supposedly being affected, it suggests the flaw is not directly related to any particular programmer, but a security flaw that may be easily overlooked in transaction api; it's still the responsibility of the administrator to ensure quality coding.

A suggestion has been made that the targeted banks may not be shielded by LL Risk API. I wish I could uncover which of these banks were protected by LL Risk Api and which ones were not. If you'd like to report your Linden Lab API status, again, please use comments.

Reported attack times seem to be taking a similar time frame. This seems to indicate one hack or a co-ordinated group of hackers.

Multiple SL banks rocked by 3.2 million L$+ heist from atm scripting vulnerability.

I logged on to another bank failure looming on the horizon this morning in second life. The problem with the SL financial community is there is a notable lack of testing of the security of atms before their implementation and some of banks tend to find out about their weaknesses after the fact. Well, this appears to be the unfortunate case with LNL. They thought their atm secure, deployed it, and now they're 3.2 million dollars down the gutter with an alleged hacker(s) heisting 3.2 million from their systems.

One of these days the banks will learn to keep balances in separate avatars and use monitoring scripts to move money around to prevent abuses. The world of "I can withdraw as much as I want when I want" really needs to go, it's not realistically feasible in this environment and poses a massive security vulnerability.

Of greater concern, Lindsay Druart stated that JTF/CAPEX's atms are programmed by the same programmer. However, I wish to note that JTF (the bank) has been around since before this exchange or even LNL existed, I do not believe most of their programming is by the same programmer and highly doubt that the same vulnerabilities exist but it's still a concern since the one that Lindsay has claimed did their programming, Unoti Quonset, is also the programmer of the Second Life Capitol Exchange, or SLCAPEX. Unoti has contested the claims that he is the direct programmer of LNL/JTF/SLCAPEX you can see his statement in the comments and the response of Lindsay Druart.

I think we just need to get a clarification from CAPEX as to who did their main bank and withdraw programming. This said, it did unnerve me to see Unoti Quonset at the atm at the same time we were having this conversation. I'm not sure of his role in all of this outside of programming, but it was rather questionable. Perhaps just bad timing... I hope. Unoti, if you're out there, I'd really like to see your response to the claims being made, you more than anyone should know how your programming works. I'd also like someone to tell me how one "hacks" an atm that operates on text entry commands. Based on my understanding of programming it'd be almost impossible to do except for if the coder left back door commands in the system. Unoti Quonset has since contested these statements saying he had nothing to do with the coding of either CAPEX or LNL. Given the expanse of the potential banks affected however, I am still nervous about putting my funds into institutions til I see who will pop and who will not.

LNL was not approved on my watch, but under the reigns of Investor Allen who managed most of the deal personally. Investor Allen began to show a very shady history after the sell of his exchange. There was a lot of verbal sparring on the initial listing conditions, but after AVIX was sold to CAPEX things seemed to calm down under the new management and Lindsay was even given a management position briefly for the exchange.

I think it's going to be a while before we get the whole story on who or what is exactly at fault. Lindsay says she's in fervent talks with Linden Labs in an attempt to get concierge assistance on the 3.2 million dollar theft. If they do not intervene it's highly likely LNL will go insolvent. This leaves a big question as to what will happen with the WSE listed LLL. According to this post by Lindsay said there was no exposure to the bank from her own real-estate company that they only had a fraction of cash in there on deposit to use to purchase some new sims, but having your leadership and finances co-mingled can be a messy affair to try to resolve with investors in the courts of public opinion.

Best of luck dealing with Mr. Linden, Lindsay, you're in my prayers.

Appended note: Someone reminded me that a couple weeks back LNL briefly halted trading and their atms were removed for reworking. According to their announcement history there is a record of atm and web page difficulties. I'd like to know who was responsible for the most recent update. They also pointed out to me the growing financial struggles of LNL in the history of the firm.

Given the current crisis I cannot morally maintain the link to their website on this blog, it has been removed from the banks section, but you may view it here for research purposes. Do not deposit at this time if an in world ATM becomes available until further clarification on these incidents is brought to light.

Did I mention this is the second bank collapse and supposed ATM heist that Lindsay Druart has been tied to? The last such collapse ocured on the World Stock Exchange, under a now non-existant ticker symbol. They took in the customers of that particular event in an attempt to restore what was lost. Supposedly, Lindsay was to be a hero and save those accounts. What now?

Update: Ah, I found a remnant of that old bank through google. It was the Touchet Group Corporation. I could not find a link back to the actual company symbol. If you note, on the page with the information there, it notes the ticker symbol as (RMV). That's one of WSE's ghost (as in dead) shell (as in rotting husk that no longer exists) companies. It was headed up by the infamous JC Brink. Lindsay got one of their sims from him. And the story was the same for that collapse. Rogue agent, broken atm coding. I smell a pattern and regardless of who is responsible it needs stopped. Diligence is the responsibility of the bank operator.

Did I mention that when the WSE was hacked, that it also lost 3.2 million linden? If this is the same crook they're walking away with $20,000.00 USD.

For more info on this past failure, visit the following links: Fraud Ghost Hits At SL Banking System, Lindsay Druart, CEO LLL's official account of the TGC incident on the WSE, Taran's TGC investigation.

Has anyone ever heard the phrase, "Fool me once shame on you... Fool me twice..." When do we start seeing CEO accountability for transaction security?

How ironic that LLL is amid secondary offer on the WSE for just a little more than twice the amount that LNL was breached by or equal to the sum of supposed thefts against LNL and the WSE combined. What an interesting coincidence. REVISION: Thanks to encouragement in the comment area and the help of Lindsay, I discovered that WSE misleadingly/alternatively mentions the current outstanding shares of the company instead of the outstanding shares in the issue, which can make the issue seem much larger, the actual issue is around 640k. This greatly relieves me needless to say.

What is the Linden?

A good friend of mine came to me today and showed me this link to Metanomics a financial reporting news site for Second Life. The link is basically to a video about exchanges and banks in Second Life and their roles in the Second Life economy. This lead to a discussion about, "What is the Linden? Is this market real or a game?" It's a question that comes up often, I'm going to give my thoughts here in the blog, so I can simply refer folks to it when they ask this question instead of repeating myself.

The Linden is a game currency. It is not a real currency. It is a currency that is valid only within the context of Second Life. If you tried to sell your Linden to your local Grocer, they would laugh at you most likely. The only time that Linden, a product of second life, becomes real currency is when you trade it through Linden Lab or another player agent. Without this conversion, the linden you hold in your account is worthless. Whenever you put your USD into Linden, you are more or less buying assets within the game, nothing more, nothing less. Anything else is an over-glorified pipe dream.

That said, when you invest within Second Life, instead of believing you are investing in a real agency, corporation, or business you should keep the proper mindset. You are investing in a game. You are investing in a person within the game who you are trusting is honest enough to do their job and to hopefully return to you an in game profit. If you are lucky, this in game profit may be utilized to your own gain or even for conversion eventually into real USD. The difference between this and gambling, is that the people you invest in may seriously be out to attempt to improve the virtual community in which you play by adding functionality, adding new venues or real estate, improving aesthetics, implementing new ideas, creating new things to do within the game. Second Life is a platform that can support many game possibilities, from first person shooters, to strategy, to basic board games.. it can all be done if you have the skills to do so. Some of the businesses here will be out to do these things, some will be scams. You have to be careful. You have to do your research..

And for God's sake, if you are deluding yourself into thinking this market is an extension of real world securities markets and behaviors, please stop it. That's purely ego.

Appended 11/18/2007, 4:38 pm:
The more I thought about it, the more that Linden seemed like Company Scrip. I don't expect to many folks to be aware of what Company Scrip is unless you come from an area that was on the extremes of society for a while or where actual legal tender was scarce. If you look at the definition, it seems much more appropriate to the Linden. If you really want to become an expert on the subject matter you may want to check out this and other discussions courtesy of Wikipedia.

CAPEX Implements Circuit Breakers

CAPEX has become the fore-runner in encouraging market responsibility and implementing market controls to prevent the radical manipulation of prices of shares and to prevent market abuses. As part of this ongoing process they are now implementing circuit breakers at 50% changes of trading value to allow investors to reconsider how they are pricing their shares in the market and to allow exchange heads to ensure that the reason for price changes are in fact legitimate and fair market forces versus manipulations.

CAPEX is the first market to use these tripwires to protect investors and hopefully it will continue to advance its leadership in market regulation, fraud prevention, and investor protection measures. I would encourage all markets to follow this lead.

Trying to get Ginko Assets back to Ginko Bondholders.

I just completed a long interview with Intlibber Brautigan, mostly over the BNT price slide and the sources of its cause. I found out something rather ironic and interesting about the situation that BNT is in. The trail leads back to the Ginko Bank collapse. The news for once, is not bad, but good.

I've known Intlibber for a while, he's a good friend. Generally I trust him and he's never fallen through a deal with me personally, so I trust what he says. From what I hear from others I've spoken to who have met him personally, he's an upright individual who truly is trying to run one of the best operations possible in the second life business environment. That said, his company has not been in an ideal position of late in terms of share value so it makes it difficult to write a story about it, until you know the source of the issues that BNT has been having.

If what I am to understand is true, when Ginko collapsed it had about 11 million shares of BNT that were registered in Nicholas' name. During the collapse Ginko liquidated about 3 million of this all together. 8.75 stayed under Nicholas' name until BNT moved to ACE from CAPEX. Intlibber wanted to do the right thing and find a way to get the value of the shares back to Ginko bond holders.

According to Brautigan; to do this he trusted Shaun Altman with 8.75 million shares under the agreement he would not sell the shares at less than 20% under NAV (approx .48 as of last financial disclosure) and that he would do the best possible to maximize former bond holder returns. Once the cash was collected, it could be given to Lukeconnell Vandeverre of the World Stock Exchange on the condition, and i quote:

[4:08] IntLibber Brautigan: shaun will publicly give Luke the money on condition he delivers an immediate and final dividend only to the GPB bondholders.

The question is whether or not a list of these bond holders still exist. Many of the shares of companies that have gone bankrupt on WSE, where GPB was listed, are no longer individual listings, but integrated into the WTF trading fund. A fund that many in the market recognize as a sad consolation prize for owning a defaulted or bankrupt stock that has not been properly accounted for in liquidation of assets.

If the last list of bond holders cannot be found anywhere, I probed Intlibber on what would be done with the funds. His statements were to the effect that he would not keep the funds, but he's promised that if the bond holders could not be located the money would go to a worthy second life charity. Given that his own shareholders have suffered so long in the weight of Nicholas' shadow, I've suggested that he may want to just reinvest it into BNT, perhaps even nullify the shares Nicholas owned so that there's a smaller outstanding share count. He objects to the nullification of shares in that he believes the value of the investment should be returned to the community which was damaged by Ginko.

Shaun supposedly has been straining against the reigns of his responsibility yet which have yielded to some questionable business market offers, but Intlibber has assured me that the situation is well under control and Shaun will be kept under his responsibility and that if trust is violated, another person may be chosen to lead the charge for those that owned Ginko Bonds.

As a footnote to this article, this is a huge challenge the two are undertaking and I want to note as a former ginko bond owner that there are going to be individual investors in the market who really appreciate your efforts gentlemen, Shaun and Intlibber, if you succeed.

Eliminated Moderation

This is my first time evaluating blogspot's functionality. I am removing moderation as I think it is to restrictive and to cumbersome in implementation to constantly maintain when I'm expecting a lot of traffic and am a strong advocate of free speach. That said, all moderation has been removed, all comments to date published. Pardon the slight delay. Hopefully this will not lead to excessive flame content.

Glug Glug Glug. Sinking ship? Or sank and just bubbling?

Okay. As if the news were not bad enough, another delisting from the WSE lists today, ACE (do not know how long this link will last). Two more freezes also while waiting response from management. I heard from someone a long time ago that THI/TGB were sinking ships. Given Chau Mu is on my friend's list and rarely shows up these days I'm not surprised by the news in tandem with the whispers of my market friends. In this case I don't think the WSE is as responsible, from what I know THI was thriving at one point and if the CEO is simply temporarily away for events in reality, it may still be thriving. Some, however have speculated THI was merely a Ponzi and I long ago pointed out, during the first great exchange wars, that the information for the CEO was not valid for anyone I was able to verify in the state of TX. I guess now this is just a waiting game. Good luck WSE administration and lets hope Chao is still around.

Crazy Month

The usual drama.

November came in about as bizarrely as the holiday that precedes its open for Second Life financial markets.

The Midas Group Bank debacle.

Yet another bank has supposedly "bankrupt" that being Midas Group Bank, which formerly traded on the WSE. There's a whole lot of drama around this story as well. Supposedly the CEO had the bulk of his assets in Hope Capitol Bonds. I don't know how long it will last, but here's what all the fuss is about. It may not be long before the last url is wiped from the google records, but for now it should be viewable and should display the following:

################################################################

Dividend and Bond Payment History

This page provides Dividend/Bond Payment History. Bond Interest payments are known as the Bond Yield and are paid either monthly or quarterly to bondholders. Dividends are a share of a company's earnings, paid either monthly, quarterly or annually, decided by the board of directors to shareholders. The dividend is most often quoted in terms of the dollar amount each share receives (i.e. dividends per share or DPS). It can also be quoted in terms of a percent of the current market price, referred to as dividend yield.

Dividends Posted by Midas Group High Yield Bonds (MGB)

Posting Date:	September 15, 2007
Period From:	September 15, 2007
Period To:	September 15, 2007
Outstanding Shares/Bonds Issued at Posting:	138,857
Total Payment:	L$1388.57
Payment Per Security:	L$0.01

################################################################

It's the last trace of information on MGB that Hope Capitol has not erased from the web.

It's not uncommon for the World Stock Exchange to completely erase all traces of any company that's gone utterly bankrupt. It makes sense from a management standpoint to remove such thing as they definitely detract from the attractiveness of one's market, but the greater concern is how is the World Stock Exchange going to to handle this situation? Given the claims, MGB had assets in Hope Capitol, owner of the World Stock Exchange, itself. If this is true, how will asset distribution for the failed company be handled? I personally have no objection to MGB being declared bankrupt. I know a little bit about Midas Commons from an earlier encounter in the SL Markets.

Few know this, but when I was COO for AVIX, I screened some of our ipos. Of which, to date, only one has failed that I screened and that was CYB, they completely forged their credentials. I had the unsavory job of filtering out the good from the bad, the wheat from the chaff among the many business ideas that will be presented to a trading exchange for sale as equity. I evaluated business plans, characters, and attitudes. When Midas Commons approached me, he had presented the IPO plan for his bank in a casino parlor. Atop that, he had utilized high pressure tactics in order to attempt have me force the IPO to the floor faster. What he didn't know, is that as COO, I didn't have issuing authority, only the CEO did. I merely gave my thoughts on whether or not a business was in fact legitimate and had an operating basis. He had claimed the CEO said I should rush his review process, which does not make sense. This smelled like fire to me, and when the time came, I talked to Investor Allen, who was CEO at the time.. and the IPO was rejected. I didn't alert most others in the markets, because sometimes companies on hard times can pull themselves from the brink. Given the new light on the identity and past of Investor Allen, I find this most ironic he turned down Midas. But to to summarize, I knew he was desperate and that his businesses which were already listed on the Word Stock Exchange, must already be failing. So if Lukeconnell Vandeverre declared the man bankrupt, something he's never done before to any other stock, there had to be good reason. If Midas had truly hedged his entire company on Hope Capital Bonds, it was one of the most foolish decisions in the Second Life markets to date. You never invest everything in any one security as a bank or a portfolio manager, it's just very wrong and excessively risky.

However, if this was the reason for the destruction of MGB and it did in fact have assets then Lukeconnell Vandeverre needs to be finding a way to get that value back to shareholders. I'm afraid just diluting ownership of both deposit holders and bond holders to WTF would not qualify as financial justice and would only serve in further dilution and damage done to Ginko Bond Holders and other victims of unethical business operators on the WSE. The price is already through the floor, this would just serve to drive it further through the floor.

The ultimate solution: Compensation MGB shareholders at the average market value of MGB for the past 72 hours that it was trading on the stock exchange prior to its freeze and closure, as; being a former very small quantity bond holder myself.. (maybe 2-500 bonds total at the most) which I used for day trading, the price was very very low as it was compared to issuance. Surely there must be that value left in assets somewhere for MGB if it had HCB assets. If not, at least publish an accounting of what MGB had, what was accessible, what was dissolved. Supposedly the WSE stands on ethical principles. I call on its administration to demonstrate those principles as best it can by providing full disclosure of the incident in some fashion that is easily accessible to the public.

While the SLEC (Second Life Exchange Commission) has called for a boycott by investors and a self-delisting of WSE companies, I only see that causing more damage to the victims and rather pointless. The trading public has returned to the WSE time and time again, and I'm sure it will again. I would just like to see Hope Capitol act with a greater responsibility towards its in world clients. After all, responsibility is also a virtue, it just isn't mentioned directly in the the virtue list. I also encourage greater research into the operating capabilities of any given business plan, verify whether or not these companies can operate and that their ideas are feasible before allowing them to issue capitol. It will take time, it will take effort, and verifying character is difficult, but in the end it will be worth it. The more events like this continue, the more damage is done to the SL Markets and WSE specifically. Eventually there will not be an investing public and all SL corporate business will be rendered worthless, versus micro-cap.

The BNT tightrope.

Due to some capitolization deals gone awry, BNT which trades on the Ancapistan Capitol Exchange is in the unsavory position of having some internal investors wanting out at a price well lower than NAV, capping their stock price around .30. Unfortunately, with market activity on ACE being described so far as lackluster at best, I don't see an immediate remedy and the situation may last for some time. That said, there is a lot of potential for volatility on the issue and it should be watched closely although Intlibber Brautigan has assured me personally that the situation is well under control and that as part of an active trading deal, the internal shareholder in question is limited to only dilute at a minimum of NAV - 20%. FYI, that's about .48/share.

BNT also has a heavy influence in the SLEC, which is likely why the SLEC is taking such a heavy hand with the WSE and encouraging its destruction at every opportunity. Lukeconnell Vandeverre was offered a membership on the SLEC at one time when the SLEC was more fair and balanced with all exchanges having their say, but recently the influence of Ancapistan has made the commission a little more hostile than normal, especially without a balancing voice from the WSE on board.

The Other Exchanges (ISE, DSE, CAPEX, VSTEX).

The other exchanges have been relatively quiet and uneventful since the beginning of November with a little bit of an upwards creep in share prices across the board on most exchanges and a slight increase in trading activity, perhaps indicating a gradual confidence rise is settling in these markets. VSTEX is seeing more activity with new offers and ipos. DSE has added an IPO and is trading slowly as typical for a very lightly advertised and inconvenient to access exchange. CAPEX and ISE have seen mild fluctuations with no significant news to report. And remember, while my reports are as comprehensive as possible, do some footwork and trade at your own risk. It's a wild second life.

On a side note, my thanks to the SL Financial Wiki, for starting a record of the past others may seek to clean from the internet.

PS. Please be kind enough to visit a sponsor :-)

For more on the Midas Group story, you may want to look at another perspective amidst the firestorm: Delicious Ideas: FED UP!!

Welcome to Dragon's Bite

So what is the dragon's bite? It's a bimonthly column written for media distribution in financial magazines and websites related to second life. The first actual report will be submitted sometime around the 15th of this month with another released on the last couple of days of the month.

So what's it about? It's about the economic conditions within second life, notably the health of banks, stock exchanges, companies, and the news (though some would call it drama) associated with their operations. Second life is a game. Investing in it is more or less playing a game within a game which can be very educational about how micro cap markets may have worked before strong regulation come to power in 1929 or how a market may work in a libertarian's ideal economic layout. There is a lot of risk, but also a lot of opportunity. How you play will fundamentally drive your profits or losses.

Who writes it? Well, I do. I'm Maelstrom Baphomet. I run one of the companies listed on SL Capex, one of the larger second life stock exchanges. The company is called Dragon Global Diversified. I once was the chief operations officer for the AVIX stock exchange, which was SL Capex before JTF Bank purchased the exchange operations and moved it to their centers. Allenvest, the bank who sold AVIX and my former employer, is in rather sad shape now because of incidences related to the CEO. I won't go into the detail here, but you can read his claims on his web page.

Back on topic, I first entered the markets around April of 2007 and I trade on every stock exchange daily. I've had big wins, big losses, but in the end I gained a lot of experience. Every day I'm learning something new about how the SL economy functions. With my articles I seek to bring awareness to the events and happenings that may affect your portfolio performance. By the way, if you think these markets work like the real ones; prepare to lose your wallet. This column is not out to issue individual financial advice relating to the game so please base your personal investing options on your own avatar's situation not just the data provided here and if you do want my personal investing advice, come see me as I do charge for such. I do a lot of research before giving advice and believe me when I say there's a bit more to this market than just "buy low", "sell high" and there's never a guaranteed profit to be made so if my advice and research turns out bunk, well... in the least, I'm in the soup with you.

My final warning to all you new investors out there, "Buyer beware. Buy only who you trust." Trust is by far the most expensive commodity in these virtual markets.