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Stephanie Roberts is a 33-year-old parks service employee in a Chicago suburb where she lives with her brother and mother; in the winter, she drives the Zamboni at a public skating rink. But she’s also Zania Turner, of glowing skin and impossibly luxuriant black hair, who sashays in silk dresses through the booming virtual world of Second Life, which is run by the San Francisco company Linden Lab. In her life as a 3-D cartoon, Roberts gathers with other avatars to role-play reënactments of obscure Star Trek cartoon episodes, build and buy digital homes and furniture, and hang out on digital beaches.

But Second Life is more than a game or a social-networking site; it’s also a venue for financial transactions. The currency used within the virtual world, called Linden dollars, can be converted to U.S. dollars at a rate of roughly 270 to 1. More than $13 million worth of Lindens are in circulation, and 318,742 residents of Second Life–including Roberts–participate in its internal economy. “It’s a fascinating and exciting place, because people are doing business in the absence of a lot of legal and regulatory structures,” says Robert Bloomfield, a Cornell University accounting professor who studies virtual economies–and coined the term “metanomics” to describe the field.

But life on the lawless frontier means risks as well as opportunities, as Stephanie Roberts found out last summer. And what happened to her is a bit ominous for those who expect to see 3-D immersive environments become centers for e-commerce.

Trouble started at the Ice Dragon’s Playpen, a recreational island in Second Life. With her movie-star looks–Roberts chose an avatar modeled after Catherine Zeta-Jones–Zania Turner had no trouble landing a job hosting a game of Slingo, which is something like bingo. She made 100 Lindens (37 cents) an hour, plus tips. And while steering Zania through various Second Life venues –such as the Moonshine Casino, where residents gambled, and FurNation, where they frolicked in the guise of animals (she was a white tiger at one stage)–Roberts saw places to deposit her money. “There were these machines. They said ‘Bank,’ ” she says. The machines handed out notes to passing avatars, promoting account signups at something called Ginko Financial, which advertised high interest rates. “With Second Life, you need money to get land and stuff that other people build,” she says. “So I thought, ‘I might as well put something in there, especially with the good interest rate, and pull it out when I need to, and help get me some stuff in-world.’ ” A few mouse clicks later, she was an account holder. She enjoyed watching her money grow. Eventually she had amassed 39,000 Lindens, worth $144.

Ginko–operated by an avatar called Nicholas Portocarrero, whose real identity is not clear–persuaded hundreds of people to deposit their Linden dollars. The reasons for what happened next are murky, but the results were clear enough: the “bank” vanished, and depositors say their money did, too. In July 2007, residents began clustering around machines to try to recover their money after Ginko began restricting withdrawal amounts. Then Ginko announced that deposits were now in “Ginko perpetual bonds” rather than Linden dollars. Those bonds soon plunged in value, and in October, they ceased to exist. The reported losses may have totaled $700,000, according to Ben Duranske, a lawyer based in Idaho who writes a blog on virtual legal issues.

Some Second Lifers have reported losing thousands of dollars in Ginko. Roberts is among the luckier ones: she says she lost only her $144 in savings. But the point isn’t just that somebody other than Roberts ended up with her money. What may be most significant is that nothing happened to whoever may have taken it. Her money disappeared into the 3-D ether.

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Credit: Hayley Murphy

Tagged: Business

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