Podex, AnsheX, DXexchange down, other exchanges wait for good news

Update (May 17): Linden Lab launches Authorized Reseller program, five exchanges now liveLinden Lab announcement is hereList of Authorized Resellers is here. 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.

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While VirWoX and CrossWorlds exchanges are hinting at some good news to come, the Podex, DXexchange and AnsheX virtual currency exchanges have shut down, victims of the new Linden Lab Terms of Service prohibiting third-party currency exchanges.

Jacek Shuftan

Jacek Shuftan

“Let me inform you that Podex was suspended by Linden Lab,” Podex CEO Jacek Shuftan told Hypergrid Business this morning.

He said that all of his accounts that were related to the Podex Exchange have been put on hold by Linden Lab earlier today.

“I really believed that the new Terms of Service is meant to protect avatars from the risk of fraud,” he said. “That was my goal as well so I was looking forward to cooperate with Linden Lab. I could not imagine that over one night they would want to destroy our cooperation and everything what I built for 6 years of my virtual life. They did. I believed that they would answer my requests to start discussion. They did not.”

If any customers still have pending transactions, he added, they should contact support.

“I personally promise that they will not lose their money,” he said.

Podex virtual currency exchange. (Image courtesy Podex.)

Podex virtual currency exchange. (Image courtesy Podex.)

DXexchange was another exchange staying up despite Linden Lab warnings, pointing to a clause in the Terms of Service that allows for 30 days before changes go into effect.

“Our avatars for our exchange activities are put on hold by Linden Lab, so there is no room for interpretation,” DXexchange announced this morning. “Linden Lab wants to enforce the new Terms of Service effective immediately. That means that we are closed permanently as of today.”

There was no announcement on the AnsheX, but resident hopes that the exchange had made a secret deal with Linden Lab were dashed today as the section of the website dealing with currency transactions simply disappeared.

Rays of hope

Yesterday, Xchange4LS posted a cryptic note on its website: “We have made a lot of thought how we can offer our services again without violating the Terms of Service of Linden Labs. We have found a solution and are going to implement it.”

Xchange4LS director Ella Lukjanov had little information to add at this time, however.

“We have a new solution for how we can offer Linden Dollar in the future,” she told Hypergrid Business. “We are implementing the service at the moment.”

Meanwhile, while some exchanges were being kicked out of Second Life by force, others received a communication from Linden Lab which also hinted at better things to come, also without any specific details.

“We have approached several organizations to discuss a potential solution that would allow them to serve their customers within the bounds of the updated Second Life Terms of Service,” said the letter. “We’ll soon blog to share more information about this solution, which we plan to extend more broadly as well.”

One of the exchanges that received this note was MBkash.

“I hope this news come soon,” MBkash CEO Johnmacloud Jun told Hypergrid Business.

Meanwhile, the exchange is cautiously optimistic.

“We are currently looking for a solution that permits us to offer our services, but right now we cannot take the risk of reopening,” the company said in an announcement on its website. “We know that some exchanges had their accounts suspended, and we also fear for our customers and our dealers.”

Jun is particularly worried that the good news that Linden Lab is promising might simply be an outright purchase of VirWoX or another major European exchange.

Since the exchanges would be completely dead otherwise, the Lindens will probably be able to buy at bargain rates, he said.

They would get access to the European customers, and to alternate payment mechanisms that the Lindex doesn’t currently offer — but, in the end, users would suffer. He pointed to the experience of the SLExchange and OnRez marketplaces, which were bought and absorbed into the Second Life Marketplace.

Other exchanges that got the note from Linden Lab include CrossWorlds,VirWoX, Virtuatex, and Gyndex.

Confusion reins

Bart Bockhoudt

Bart Bockhoudt

The lack of planning and communication on the part of Linden Lab has created a confusing situation for exchanges. Some closed immediately, some last Sunday, others stayed open this week and got slammed down. And nobody knows whether they’ll have a business next week or not.

“We have to deal with chaos,” Gyndex founder and co-owner Bart Bockhoudt told Hypergrid Business.

The following exchanges are down, and have not posted any updates: MoneyslexFirst MetaMoneyserversELDEXchangeBulidoCash ServicesvForEXVirtual Mind, and Exchange 24,

Meanwhile, two petitions are continuing to gain signatures. A petition on change.org by French Second Life users has 243 supporters, and one on openpetition by German users has 1,310.

Foreign residents of Second Life have particular problems with buying and selling Linden Dollars. Some do not have access to credit cards or PayPal, and prefer to use prepaid cards, telephone payments, local bank ATMs or other channels to buy or sell Lindens. Others have credit cards or PayPal, but have trouble using them for international purchases, or face high fees or extremely long wait periods while the transactions go through. Some people don’t want to use their credit cards online out of security worries.

“I feel compelled to give up my sim,” said Michael Pusch, a signer from Austria. “And that would be only the tip of the iceberg… the consequences will be greater than when they had forbidden the casinos… only this time Linden Lab will not recover from it.”

Some of the alternative payment methods accepted by Cash Services.

Some of the alternative payment methods accepted by Cash Services.

“I only have the option of buying [Lindens] on PaySafe,” said Janine Zengerle, a Second Life resident from Lüneburg. PaySafe is a German prepaid card specifically designed for safe online payments.

I’ve always used companies like Eldex or VirWoX,” said one Berlin-based user. “I never had any problems. Moreover, it is settled directly with my bank and I do not need extra money to my PayPal account, and can exchange for smaller amounts.”

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.

  • why does anyone believe that LL will listen to them? they have not in the last 6 or 7 years and if they don’t care about past partners like IBM who poured in millions in both real money and SL-specific development

    why does anyone think LL cares?

    • 1. Past behavior is no predictor of future performance. (Plus, Linden Lab is not necessarily known for consistency.)
      2. Someone at Linden Lab may have honestly thought that third-party exchanges were taking away revenues, not bringing in new revenues that LL would not otherwise have seen.
      3. Some people are committed to SL, but need an opportunity to vent. A petition allows them to do that, in a public way, with lots of other people.
      4. You never know. It’s a one-in-a-million chance …. but… it just … might … work.

      • “Million-to-one chances crop up nine times out of ten.” — Terry Pratchett 🙂

        • The million-to-one chance worked… with a few limitations 🙂

      • Reina Benoir

        Past behavior is certainly a precursor to tuture performance and given that LL does very little listening and just does what it wants regardless of how it screws its “residents” why should anyone think that THIS instance is the one time that LL manages to get its head out of its ass and take anyone else’s wants, needs, or protestations into consideration. It’s one think to hope for the best but I wouldn’t make any plans that hinge on LL listening to anyone.

      • Dave Bell

        “The race is not always to the swift, nor the fight to the strong, but that’s the way to bet.”

    • Dave Bell

      Because they haven’t heard of SimOnAStick?

  • Interesting thought about the possibility of LL buying VirWox. VirWox has part of its work done in collaboration with the University of Vienna — which somehow gives it credibility, i.e. it’s not just a bunch of anonymous developers gluing together a piece of software and reaping a profit from a much-needed service. While certainly most of the exchanges have excellent reputation in all regards, VirWox has this interesting connection with the academic world. So the “fear” of LL buying VirWox might be not a completely stupid feeling.

    Let’s not forget that LL is fond of absorbing residents’ developments and make it their own 🙂 (see the example of the SL Marketplace)

  • looks like i’m still boycotting SL. Thank goodness for OpenSim.

  • Gaga

    I don’t really understand what all this talk of Linden Lab possibly taking over VirWox so they can better serve the customers the threatened Exchanges were serving. I have been buying my $L from LindeX directly in the viewer using my credit card info LL has on file. I live in the UK and I notice that the payments are processed through a Gibraltar bank so I am wondering what is meant that LL can’t process European transactions? They process mine ok.

    In my view Linden Lab are simply taking over all the key pillars of the SL economy and driving out competition. In the past they have closed down the private banks and share dealing. They bought out Xstreets and integrated it into their own system. They cut off education discounts and closed Teen grid then they banned any form of gambling (although we all know slot machines are everywhere in SL still and there are “word of mouth” gambling joints). So, I just see this as another step on the road to a closed economy where all the big money parts are owned and run by Linden lab rather like the Chinese economy really.

    I just see them strengthening the iron curtain they have around themselves and I’m glad I don’t have all my eggs in that basket any more.

    • i use to buy direct from LindeX but afew countries like Portugal are not supported by LindeX so those users have to use a 3rd party exchange to buy L$, its those people that are right now being screwed as well as afew 3rd party exchanges that have recently closed down. Those people are the reason why i am boycotting SL.

  • Dave Bell

    Some time in late 2011, didn’t Linden Labs make a big internal change to their payments system, claimed to make it easier for us foreigners. There’s still some stuff on the forums from about that time about the end of that beta, but I have not been able to find any other info. There was some talk of using a third-party card-payment service to accept payments in foreign currencies, but my recollection is vague.

    It is possible that some problems are connected to that set-up. What’s the reputation of the third party, I ask myself. I have uneasy recollection of a few claims made at the time. Or was it the previous change, and no longer a current issue?

    Paypal works for me. My card issuer refuses payment to Linden Labs. If Linden Labs gets awkward about my next Premium payment not being from a card, I am going to be wondering why I need to pay Linden Labs anything. I can hang out with friends for free. I’m not sure I see any advantage on the Support side for a Premium account.