Update 17th May 18:45 BST: The Lab has launched an “Authorised Reseller of L$” programme. Initial report here.
Update: 17th May: Gwyneth Llewelwyn provides an interesting and thoughtful analysis on the entire situation. DXEchange has indicated it has received LL’s e-mail of a potential solution, and is considering the matter.
Update: 16:55 BST: The e-mail to TPEs is apparently light on details, but includes the following statement: “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. We will soon blog to share more information about this solution, which we plan to extend more broadly as well.” So it would appear that the “potential solution” may initially be made on a limited basis.
MBKash has also indicated it has received the e-mail from Linden Lab, as has Gyndex.
There appears to be new movement on the situation involving third-party exchanges dealing in Linden Dollars following the recent change to the Second Life Terms of Service, and movement of a most confusing kind.
On the one hand, blog posts have started appearing on various exchange websites noting that they have received further information from the Lab, and that matters may be resolved in a manner which would allow them to resume the provisioning and exchange of Linden Dollars to Second Life users.
On the other hand, some exchanges are indicating that the SL accounts they use to handle their in-world dealings have all been suspended by the Lab.
On May 7th 2013, Linden Lab updated section 5.3 of the Terms of Service, which deals with the buying / selling of Linden Dollars and third-party exchanges (TPEs). While the ToS appeared to indicate that while such exchanges were not “authorised” by the Lab, the re-wording gave the impression that users could still use such exchanges while re-emphasising that doing so was entirely at the user’s own risk.
However, a blog post announcing the updated ToS change stated the that use of third-party exchanges was “not allowed” under the new ToS, and shortly thereafter TPEs started to receive e-mails from Linden Lab ordering them to cease dealing in Linden Dollars and also to remove / disable all in-world ATMs from SL with immediate effect. Third-party viewer developers were also contacted and told to remove any links to TPEs within their viewers.
As well as leading to a lot of speculation as to the reasons behind the move, the combination of mis-matched ToS update and accompanying blog post, together with the e-mail to TPEs has led to a lot of confusion and upset.
However, a number of exchanges have indicated that they have had further communication from the Lab which may allow their to resume operations. These include, at the time of writing, VirWox, CrossWorlds and Virtuateq (the latter’s update is in Dutch).
The VirWox update reads in full:
Good News: Linden Lab has approached us with a potential solution that would allow us to serve our customers within the bounds of the updated Second Life Terms of Service. We are in discussions with them and look forward to being able to share more information very soon.
Similarly, CrossWorlds also reported:
We have received an e-mail today with regards the problem from Linden Lab. It informs us that there may be a potential solution that would allow us to serve our customers within the bounds of the updated Second Life Terms of Service.
As soon as I hear more I will let you know… and fingers crossed we can fix this problem.
It is not currently clear how many other exchanges have received similar e-mails from Linden Lab, which appeared to start issuing them late on Wednesday the 15th May, PDT, and so it is possible that updates may be forthcoming from other exchanges as the day goes on.
Quite what the “potential solution” might be is unclear. There has already been some speculation that it could be for TPEs to register as MSBs with the US Treasury Department’s FinCEN or perhaps providing evidence that they are properly registered under / adhere to any corresponding requirements within their country of operation.
Elsewhere the news is not so good. In the early hours of the morning on Thursday May 16th (European time), Jacek Shuftan reported on the Podex blog that:
Tonight at 2.00 o’clock all my accounts related to Podex Exchange were put on hold by Linden Lab.
I really believed that the new ToS is meant to protect avatars from the risk of fraud. 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.
Similarly, DX Exchange are also reporting they have had accounts suspended:
Our avatars for our exchange activities are put on hold by Linden Lab, so there is no room for interpretation that Linden Lab wants to enforce the new TOS effective immediately.
That means that we are closed permanently as of today.We expect Linden Lab to enforce the TOS on all other exchanges today.
Defying the ToS?
There has been some speculation that Podex accounts may have been blocked as a result of a decision by the exchange to continue to offer L$ in defiance of the ToS change / e-mail, with Podex citing the 30-day “grace” period prior to changes to the ToS coming into force.
What is interesting here is that DX Exchange appears to have suffered the same fate as Podex (at least for the moment) after they had initially suspended operations, and then, according to Hypergrid Business, decided to follow suit alongside of Podex and others. This move apparently led to Bart Bockhoudt, co-owner of Gyndex indicting to Hypergrid Business that he would be objecting to the move by DX Exchange and seeking further clarification from the Lab. Whether this prompted some exchanges receiving account suspensions or not is also unclear.
However, one of the other exchanges which also opted, according the Hypergrid Business, to continue to offer Linden Dollars under the 30-day grace period cited in the ToS was CrossWorlds – who are one of the exchanges who have received the e-mail citing a “potential solution” from Linden Lab. Again, whether this is indicative that the likes of Podex and DX Exchange have / will also receive similar e-mails, and that the current account suspensions will be lifted / are the result of confused communications within the Lab, remains to be seen.
Overall, the result of these moves appears to leave the entire situation as confused as ever, and doubtless open to further interpretation and speculation. Expect further updates as / when matters become clearer either via the Lab or through contact with the various exchanges.