Linden Lab allows third-party currency sales

In a surprising reversal, Linden Lab has decided to allow third-party exchanges to sell Linden Dollars to users, a move that will benefit international Second Life residents who had difficulties using the official LindeX exchange.

“We’ve heard from some users outside of the US who are concerned that it may now be more difficult for them to purchase L$ to use in Second Life,” the company said in an announcement today. “Now, to give users more options and make it easier to purchase L$, we’re launching a pilot program of Authorized Resellers of L$.”

Authorized reseller seal of approval.

Authorized reseller seal of approval. (Image courtesy Linden Lab.)

The five exchanges currently allowed to sell Linden Dollars to users are  AnsheXBuildoVForEx IncVirWoX, and Zoha Islands. No third party exchanges are allowed to purchase Linden Dollars from users, however.

Exchanges rushed to put up the seal of approval on their websites and switch the machinery back on.

The machine to sell Linden Dollars, that is.

“Please note that under the new terms of service we are no longer allowed to take back your Linden Dollars from Second Life and let you ‘cash out’,” VirWoX said in an announcement.

However, the VirWoX Partner Network and the Currency Shop Program will stay up and running, the company said. “About 5.5 million Linden Dollars have already been paid to our partners in the first four months of 2013.”

VirWoX is one of the largest third-party exchanges, and also the backer of the OMC virtual currency, used on over 30 different OpenSim grids. This good news for VirWoX is then also good news for the OpenSim community.

Cautiously optimistic

The news also comes as a relief to those who had been worrying that Linden Lab planned to buy or more of the third-party exchanges in order to provide more payment options to users, while letting the others die.

Jacek Shuftan

Jacek Shuftan

“Undoubtfully, it is a great news for residents who are not able to use Linden Lab payment methods,” Podex CEO Jacek Shuftan told Hypergrid Business. Podex has already sent in its applications to become an authorized Linden Dollar reseller, he added.

“It will lower the profits of independent exchanges but gives a sparkle of hope that we can continue our virtual existence,” he said.

The new authorized reseller program also comes with its own Terms and Conditions. Shuftan said it looks like this document supports the theory that Linden Lab’s recent moves were prompted by new guidance from US regulators, and not by greed, as suggested by some users.

Bart Bockhoudt

Bart Bockhoudt

“Wow. Not expected,” Gyndex founder and co-owner Bart Bockhoudt told Hypergrid Business. “Everybody back to the programming board and redevelop their application.”

Gyndex has already applied to be an authorized reseller, he added.

MBkash and WoozKash CEO Johnmacloud Jun said that he and his colleagues at Cash Services are still deciding what to do, but will react soon.

Odds are that most exchanges will quickly sign up, given that the alternative is to go out of business altogether.

 

maria@hypergridbusiness.com'

Maria Korolov

Maria Korolov is editor and publisher of Hypergrid Business. She has been a journalist for more than twenty years and has worked for the Chicago Tribune, Reuters, and Computerworld and has reported from over a dozen countries, including Russia and China.

  • Definitely the best of news possible, considering the circumstances. Aye, there are some caveats and some unanswered questions, for instance, is LL absolutely and completely FinCEN-compliant or not? Will they stop the “cashing out” on the LindeX as well?

    Nevertheless, the positive advantages of this reseller programme far outweight the negative ones. I can even see that third-party exchanges might see a slight increase in their revenues (even though it comes at a lesser profit) — after all, now residents will know that these companies are fully insured (they have to, to be able to apply for the official reseller status) and that LL is taking a much closer look at what exchanges are doing with “their” L$. This should make people a bit more relieved and encouraged to seek third-party exchanges as an alternative to the LindeX.

  • we the residence have been heard. My boycott is over. Now to restart my life in Second Life.

    • Joe Builder

      Give me a week I`m right behind you

  • Alisha Ultsch

    But how are us in Europe supposed to cash out at a sensible exchange rate ? Selling in US$ only means there is an extra currency conversion charge. Will LL start trading in Euros as well ?

    • they have posted news about all of this and state the following.
      “We know that users are also concerned about the length of the LindeX’s cashout process and the limited choice of currencies when selling L$. We’re currently investigating ways to improve that experience for users while still providing superior fraud protections, and hope to hasten the cashout process and offer new currency options in the future.”

      http://community.secondlife.com/t5/Featured-News/More-Options-for-Buying-Linden-Dollars/ba-p/2011355

      • Reina Benoir

        They just figured out this may be a problem? It’s only been a problem for years. Not too quick on the uptake are they?

        • lol, your statement (i agree with) reminds me of the yearly declaration by the CEO that lag will be a primary focus for the year . . . =D

          • I solved –MY– lag issues in sl-)))

          • Gaga

            I solved my SL lag issues too but I still have to go there. I just make it less often *_* lol

          • Images?

    • Inara Pey

      The blog post indicates that the Lab are looking into possibly extending the LindeX cash-out process to other currencies – and shortening the cash-out time period at long last.

    • Dave Bell

      Exchange rates are one of the ways that bankers make money. There’s the published headline exchange rate which is set by a rather artificial high-speed speculative market, and then there are the rates that people buy and sell at so as to actually do business. And, whether it’s LL or the customers making the exchange, they’re not going to get close to the headline figure.

      I don’t expect Linden Labs to offer a better deal for anyone cashing out in another currency. And I cannot see how they can do anything to get clear of FinCEN rules if they do offer cash-outs.

      The way that FinCEN seem to be defining money, for LL to get out from under that. I can see them ending up having to charge VAT on sales of L$ to those of us in the EU. So it could be worse.

  • Gaga

    The mid boggles! So the Lab dose a U-turn after realizing they might be facing a financial melt down and increase loss of regions due to some ill-thought out decision making. Is there any planning at all at Linden Lab or is it just one knee-jerk action after another. Perhaps it is just a case of “Let’s try this and see what happens.”

    Why did they not announce the L$ Reseller Scheme and call for the Exchanges to register instead of changing the TOS then breaching their own 30 day rule by sending out threatening emails warning the Exchanges they were breaking the TOS leading to panic, shut-downs, uncertainty for customers and very bad press to boot?

    Linden Lab, I have a question; “Who are the village idiots when you lot are not there?”

    • Joe Builder

      c’mon Talla there’s room for you in SL, 🙂 Time to leave the stone age LOL 🙂

      • Gaga

        Ah Joey. See you don’t know much. I’ve always been in SL and I still am. I have two regions there (once had as many as five even). I trade there – yes I do and I have five regions in OSgrid and a private nine region mega standalone world for sailing and testing stuff I will sell in second Life. Some of us chose wisely to pull our head out of the sand to stop Linden Lab pulling all the money out of our bank accounts which leaves a whole lot more money available to enjoy the bounty of a free and open Metaverse.

        Hey, there’s room for you too, Joey!

        • Joe Builder

          LOL how about 100 region Mega in OSGrid and a 36 region grid in opensims its all my little sandbox. I accept all LL does, only the strong survive there. And I make a lot of $ if I so choose. I been in both for some number of years I know what’s what.

          • Gaga

            Yeah, I thought I knew who you was. Thanks for dropping the hint and nice to know you are off back to second Life. That grid is perfect for you, Joe. Just think, with all that money you have you can help LL’s declining region count and build a 100 region mega over there – whoops! SL don’t have mega regions, just clumsy border crossings (what was that you said about the stone age?) – but, whatevah. Linden Lab just loves suckers with more money than sense. Off you go!

          • Joe Builder

            Huh, I make avatars in SL no need for mega regions just a small simple store. I do not spend one cent there, Can`t recall last time I did. I only go to SL because of there robust economy and large community, What I do there is and always be in demand. Like I said before Opensims is my sandbox, just to create silly things. And as far as region decline hmm maybe but there is no and 0 proof of that. BTW I can do both, Run accounts in SL and keep all my opensim regions online 🙂 I know the game, not my first rodeo. The name thing, that I don`t understand many already know who Joey Hyx is nothing to hide.

          • “as far as region decline” – zero proof?

            when LL used to report their user hours, you could see the declines (one year was an 18% decline) and there’s no reason to doubt Tyche Shepherd’s region counts . . .

          • Joe Builder

            Is Tyche Sheperd under the employ of LL?? if not only another theorist. And there is many, I like them to be honest extremely amusing.

          • Gaga

            There is an API that works on GridSurvey website. So there are multiple avenues where an automated data collector can collect stats, in addition to the Second Life login screen.

            Second, GridSurvey posts the names of all the regions it finds. So if your region is not on the list, you can say, “hey, they missed my region.” Or if a region is on the list that’s been gone for months, you can say, “hey, they’re still counting that region even though it’s gone.”

            I have not seen any reports that they have inaccurate data. Not from the Lindens, not from residents, not from anyone else. In addition, their data is in sync with other data sources, such as their chief competitor, Metaverse Business

            This comment was originally posted by Maria on the “The Sweet Smell of Desperation” topic.

          • is that aka Joe Builder?

  • Joe Builder

    Smart move, It seems again LL pulls through with a bit more money for them now they have resellers. That’s Big business for ya.

  • AviWorlds

    yeah but you cant cash out. These third party currency exchange companies can only SELL lindens to you.

    To cash out you need to use Lindex.

  • Dave Bell

    I had a careful look at the L$ pricing, and it looks that buying through a reseller in your native currency is not much worse than buying from Linden Labs direct, with currency charges, There’s not much in it, but card companies do make you pay for the convenience. Paypal isn’t brilliant if you use them as a card processor, the rates are better if you transfer money to Paypal, convert to USD within Paypal, and use those USD to pay Linden Labs.

    I’ve seen some complaints on the forums about the costs of cashing out, but the rates are nothing unusual, alas. It was the exchange costs which were one of the avowed reasons for the creation of the Euro.

    When the exchanges were cashing out, they were less exposed to the currency markets. People cashing out in Euro were balanced by the people buying. They didn’t have to buy so many USD to get L$. I’m a bit doubtful that the current low prices will hold.

    The actual L$/USD rate has been unaffected by all these. The daily fluctuations of been locked in the same narrow range for a long, long, time. The stability, with the events of the last couple of weeks, is surprising.

  • dang, let me be the first to say i was wrong about LL reversing their TOS

    but . . . what it means (ie, TPV history) is yet to be seen

    reminds me of the Openspace debacle – LL (Jack L) announced the changes and a deadline and idiots like me followed their announcement and converted OS to fulls, only to later be told they would extend it a year – that was the death knell for me inSL . . .

    that said – their reversal shouldn’t be heralded as awesome but as a sign of poor decision making. it’s like smacking you and then saying i’m sorry . . .

    • but, wait, isn’t there a ton of ppl in sl who like that sorta thing??????-))

  • Wondering

    “We’ve heard from some users outside of the US who are concerned that it
    may now be more difficult for them to purchase L$ to use in Second
    Life,”

    This sounds so much like LL spin. Why would it be more difficult for them to purchase L$ when they can purchase right from the company? And what percentage of users are we talking about?

    My conspiracy-theory nodes kick in and offer a different view: Linden Lab attorneys receive a few letters regarding anti-monopoly laws and possible lawsuits… and do a quick policy reversal.

    Yeah, that sounds much more plausible. 😀