SL's World Stock Exchange catches flu -- how far will it spread? UPDATED
Posted by Shava Suntzu at 7/25/2007 3:04 AM and is filed under case.study,in-world.tech,griefing.n.hacking,linden.labs 
(9/30 -- after claiming a panic on Ginko Bank, news which made Reuters, Ginko buys the AVIX exchange and announces an unlikely IPO, putting up 4% of the bank for L$5M, and refusing to provide historical P&Ls -- details to come)
(old news, but perhaps relevant: Is LL liable for financial fraud in SL? [reuters])
(9/26 -- new from Beyers on metaversed: SLEC news conference and analysis)
(9/25 -- new from Beyers on metaversed: allegations of coverup!)
(9/25 -- new from Life4U [disclaimer: I wrote the script for this piece] -- a caveat emptor to investors in SL)
I heard from Beyers Sellers today -- that's Robert Bloomfield of Cornell (and also an author on Terra Nova). He had just published a blog article with news that the World Stock Exchange may have been hacked for L$3.2M (around US$12K).
The main metaversed.com blog also reported the news as unconfirmed.
Executives from a listed company have been associated with the wrongdoing, and their accounts suspended. They have publically responded.
WSE has also posted a response on the WSEonline site.
It will be interesting if this highlights that the inworld banks and exchanges have no regulation or oversight as to their general business or online security practices. Not that this should make them shut down, but there seems to be a lack of "caveat emptor" gene in a lot of SL folks that makes them...poor investors.
This should improve the gene pool of investors, exchanges, banks, and listed companies in the long run -- if it doesn't scare folks away from the markets entirely.
It's 4am here, but I'll post more news as I find it!
(old news, but perhaps relevant: Is LL liable for financial fraud in SL? [reuters])
(9/26 -- new from Beyers on metaversed: SLEC news conference and analysis)
(9/25 -- new from Beyers on metaversed: allegations of coverup!)
(9/25 -- new from Life4U [disclaimer: I wrote the script for this piece] -- a caveat emptor to investors in SL)
I heard from Beyers Sellers today -- that's Robert Bloomfield of Cornell (and also an author on Terra Nova). He had just published a blog article with news that the World Stock Exchange may have been hacked for L$3.2M (around US$12K).
The main metaversed.com blog also reported the news as unconfirmed.
Executives from a listed company have been associated with the wrongdoing, and their accounts suspended. They have publically responded.
WSE has also posted a response on the WSEonline site.
It will be interesting if this highlights that the inworld banks and exchanges have no regulation or oversight as to their general business or online security practices. Not that this should make them shut down, but there seems to be a lack of "caveat emptor" gene in a lot of SL folks that makes them...poor investors.
This should improve the gene pool of investors, exchanges, banks, and listed companies in the long run -- if it doesn't scare folks away from the markets entirely.
It's 4am here, but I'll post more news as I find it!
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You make a good point about the unregulated nature of the SL investment world. Investors are definitely waking up to the risks that poses. Some of the exchanges are trying to set up an independent "standards" body (the Second Life Exchange Commision) to at least enforce reporting transparency and minimum stnadards. But its a real wild west now. As to this alleged fraud, I don't see how regulation would have prevented it. Someone working on the WSE ATM software saw the opportunity and, allegedly we must say for now, took it.
CM
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There are business practices and regulations in real life that involve things like bonding people who work on financial software, professional liability insurance, and various sorts of reviews that protect financial software from being easily taken advantage of by programmers without some recourse for the financial institution.
I'm actually trying to find something that talks about what a programmer has to go through (bonding, insurance, background check, placing firstborn in hostage situation) to work on banking software (which WSE says is where the vulnerability came in). I can't find a reference for it, but only the memories of friends complaining of sitting idle for a month after hire before they were allowed to start working, as a consultant, the first time he worked in a financial institution.
I'm not sure if this is law or a voluntary standard -- but much as I think the SLEC is a good idea, the scale of current SL finance probably won't support the overhead of bonding and professional liability for those who touch the guts of banking and exchange software.
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