End of Linden$ Exchanges

The recent ToS change left some questions as to whether third parties could continue trading Lindens. A subsequent post on the SL Blog seems to equate “unauthorized” with Not Permitted.

The kicker is the emails being sent to the operators of Exchanges. One German operator (Milz Yue) posted on a forum:

As described on the Second Life blog, updated Second Life Terms of Service disallow trading of Linden dollars (L $) on exchanges other than the LindeX.

As operator of a third party to exchange, You Should cease Facilitating L$ trades on your exchange immediately to comply with the Terms of Service. Any virtual ‘ATMs’ or scripted objects in Second Life that are connected to your exchange should therefore be removed immediately. 

Please be sure to read the complete updated Second Life Terms of Service and take the steps Necessary to comply and keep your Second Life account (s) in good standing. 

Thank you in advance for your cooperation. 

That may not be a perfect translation. But, it seems to make it clear, Linden Lab will be the only currency exchange in Second Life. 


On the Virwox site this is posted:

2013-05-08: IMPORTANT changes in Linden Lab’s TOS

Linden Lab has recently changed their Terms of Service. Section 5.3 states that transactions on Linden Dollar exchanges other than the LindeX are “unauthorized” and “Buying or Selling Linden dollars anywhere other than the LindeX is done so solely at your own risk.”. This is not much different that what is was before.

However, in a recent blog post Linden Lab interprets “unauthorized” as “not permitted”. This would mean that we can no longer offer our service to Second Life residents.

We have asked Linden Lab for clarification. Until we know what this all means, we have disabled deposits of Linden Dollars (the terminals will send them back), disabled the “Currency Shop” for Linden Dollar purchases, and disabled the withdrawal of Linden Dollars to Second Life. Other virtual currencies are not affected.

We will post updates here when we know more. Please refrain from sending us support questions about this issue, at the moment we will not be able to give you more information.


From reading the ToS I assumed the Lab was limiting their liability and reducing their FinCEN reporting requirements. What is said in the SL Blog post colors that a bit. But, the emails seem to confirm the most drastic interpretation of the ToS is the correct one.

Since the FinCEN regulations and implementation are being interpreted by the Lab’s attorneys, who are likely talking with the government administrative types, there is not going to be any appeal. The Lab has its marching orders and staff is implementing them.

This looks like bye-bye to the exchanges.

Alex Kadochnikov wrote about the coming problem a month ago. See: Could Linden Dollars become real money? The article first appeared on Modern Payment Systems.

So, the only thing that can be done is try to get the Lab to provide a reasonable service. As it is now, it takes several working days for L$ to convert and arrive in PayPal. That is a problem for some people. In numerous foreign countries there will be no good exchange service.

With your PayPal account, you can only receive payments in:

  • Canadian Dollars
  • Euros
  • British Pounds
  • U.S. Dollars
  • Japanese Yen
  • Australian Dollars
  • New Zealand Dollars
  • Swiss Francs
  • Hong Kong Dollars
  • Singapore Dollars
  • Swedish Kronor
  • Danish Kroner
  • Polish Zlotys
  • Norwegian Kroner
  • Hungarian Forints
  • Czech Koruny
  • Israeli New Shekels
  • Mexican Pesos
  • Brazilian Real (only for Brazilian members)
  • Malaysian Ringgits (only for Malaysian members)
  • Philippine Pesos
  • New Taiwan Dollars
  • Thai Baht
  • TRY for Turkish Liras (only for Turkish members)

This could force a number of people out of Second Life. I would also think it could force some SL businesses to close. I doubt this is something Linden Lab wants to happen. But, the problem here is the US government just doesn’t care. It is big and growing. Large organizations are known for their inefficiency and stupidity. So, things won’t be getting better for the L$.

14 thoughts on “End of Linden$ Exchanges

  1. Am I the only one concerned that LL legal is stating one thing in the TOS then someone (them?) is ‘clarifying’ it to say something completely different? Who is driving this car?

    • The larger a company gets the more of this sort of thing one sees. Communication between departments breaks down.

  2. Another way of LL to killing itself. I wonder what they really wants because they keep doing wrong and wrong. I just really dont understand why they make things worse for theirself.

    Ugh, now I need to learn how the hell I sell L$ with them since I never did lol.

    • Don’t confuse the legal departments overly cautious tendencies with good marketing. I doubt the Lab has much choice.

      When you sell, use a sell order for the best price.

  3. Honestly… I thought it was about time. Made very little sense to let 3rd party process their own exchange on these current.

    This article was little strange to paint it as “bad news”… it isn’t. Keep in mind before making rebuttal, Average exchange rate barely changed much. It kept hovering around 250/1 for more than 2 years. It has been steady, straight on since then. So it’s not much of a loss if these doesn’t change often every month instead of by years.

    This isn’t a bad news. It’s more like someone finally mowed the lawn.

      • Competition? …It barely exist at all. At least they did gave chance to let it happen, it was just beyond point of absurd use for too long and things was attracting frauds and scammers like flies.

        It’s about time anyway.

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  5. It’s almost funny how some SL users are reacting. It’s fine for Linden Lab to hamper us to stay law abiding to say…stop copybots or delete copyright infringing assets, but if Linden Lab hampers us to stay law abiding to something like FinCEN rules and guideliens that protects the public at large it sucks. And according to you Nalates, its big government.

    L$ is a substitute currency that can be bought and cashed out by the thousands. Regulating money and keeping it from being used for crimes is one of government’s oldest duties dating back to high seas crimes noted in the constitution. It makes all sense in the world to regulate convertible, substitute tokens of real money the same as real money. More precisely, it makes sense to regulate virtual currency like L$ the same way money orders, travelers checks and other substitutes for real money are regulated. Argue the specifics of the regulations, sure, but the common sense of easily converted substitute money warranting being treated the same as real money? I don’t get that.

    Furthermore, just because Linden Lab has to comply with FinCEN rules and guidelines now doesn’t make their service has to suck. The problems people have with LindeX are wholly separate from any FinCEN issues.

    • Ezra, you miss a keypoint in the nature of the Constitution. It is not the job of government of preempt the behavior of citizens. It is government’s job to RESPOND to crime and prosecute those misbehaving. That may be a subtle difference, but it is a key point of the philosophy of freedom.

      • “It is government’s job to RESPOND to crime and prosecute those misbehaving. ”

        Responding requires knowing a crime has happened. That requires companies like Linden Lab to responsibly report suspicious activity with their virtual currencies. FinCEN guidelines call for this; responding.

        “It is not the job of government of preempt the behavior of citizens.”

        Which FinCEN rule or guideline “preempts the behavior of citizens”? I don’t believe i’m the one missing anything, you seem to have an issue with ghost matters. You point out a specific regulation Linden Lab is in bondage to now that you don’t like that’s overreaching and we might even agree. But saying “the problem if the US government” and that its “big” tells me nothing.

        • If big government removal of privacy does not say something to you… well, I can’t help you.

          • Again, all you’re doing is saying that government is “big”. You’re telling me Linden Lab’s FinCEN compliance is a removal of my privacy. How?

            I’ve already read how Linden Lab will be held accountable enough to know what you’re saying is not the case. But it’d help if people like you with a readership didn’t spread unfounded hysteria without citation. You especially tend to care enough to provide rationale for everything you blog about; even the most miniscule of technical details when it comes to SL issues. So, pardon me if this blog has created expectations beyond government is “big” and terrible-thing-X is going to happen because of not-given-reason-Y..

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