New Second Life terms and conditions

[Gabriele Graves]

15 minutes ago, Rolig Loon said:

Oh, I didn't say that it couldn't be done and I admitted that  it would usually be hard to prove you violated the TOS. Still, since you brought up the idea  ... ☺️

An unenforceable law is no law at all.

Edited October 26, 2022 by Gabriele Graves

[Rolig Loon]

4 minutes ago, Gabriele Graves said:

An unenforceable law is no law at all.

We're mincing words, but I agree.  To draw a parallel with RL, according to IRS regulations, you can give up to $16,000 per year as a gift to any one person, without having to pay any gift tax. It's difficult for the IRS -- and hardly worth their time and manpower -- to enforce that law, but if they catch you for some other reason and happen to discover that you gave your friend $50,000 without paying the tax, you'd be in trouble.  It may be almost unenforceable and, perhaps debatably unfair, but it's the law.

In any case, I wasn't trying to derail the conversation for the point.  I was just offering it as clarification. 

[Ceka Cianci]

30 minutes ago, Persephone Emerald said:

If you had no Tilia account, but had lindens you wanted to cash out, you could perhaps gift them to a trusted friend in SL, who could then gift you their approximate RL money. Technically this wouldn't be selling the linden dollars, but would rather be an exchange of gifts.

I also gift my landlady rent money every month through PayPal and my housemates gift me their share of our Internet fee. If we were to exchange money through PayPal as a commerce transaction, PayPal would charge us a fee.

I would say it's a harder way to get caught, but really it's still gonna be seen as selling linden dollars if there was a way they ever could connect the dots to the transaction..

But I think in their eyes that's a little fish transaction, when really someone doing that as a business, like token sellers in other games ,are the ones they would be really concerned with.. The ones with websites, where someone buys a certain amount of tokens for a certain game and then some farmer that has an account in world gives them the tokens.

 

[Rowan Amore]

There's a well-known creator who sells Ls off her Twitter account even after being reported.  Her stores still up, too.   Go figure.

[Gabriele Graves]

25 minutes ago, Rolig Loon said:

We're mincing words, but I agree.  To draw a parallel with RL, according to IRS regulations, you can give up to $16,000 per year as a gift to any one person, without having to pay any gift tax. It's difficult for the IRS -- and hardly worth their time and manpower -- to enforce that law, but if they catch you for some other reason and happen to discover that you gave your friend $50,000 without paying the tax, you'd be in trouble.  It may be almost unenforceable and, perhaps debatably unfair, but it's the law.

In any case, I wasn't trying to derail the conversation for the point.  I was just offering it as clarification. 

Agreed, I was just pointing out the absurdity of having laws or rules for things that could never be enforced, in the case of LL that is.

I actually had this in mind:

"In Austin's theory of law it is a necessary condition of a rule's being a rule of law that it should be enforceable"

From here: The Enforceability of Law by F.S. McNeilly

I have no comment about US tax laws.

Edited October 27, 2022 by Gabriele Graves

[Nika Talaj]

I've read the TOS and I don't think it's any more frightening than most other financial ToS's I have (generally failed to) read in entirety.  BUT the two bullets prefacing LL's blog post are basically a threat, and the fact that it is the same as statements buried in credit agency ToS's does not change the fact that most SL users will find it rather offputting when splashed across their login screen.  

 

Quote

 

Here’s what’s new in this update:

• We clarified certain functions associated with the LindeX as well as the terms applicable to orders placed on the LindeX.
• We added a section describing the terms applicable to your use of Stored Value Accounts, including your relationship with Tilia LLC. 

By continuing to use our services after the changes take effect, you agree to be bound by those changes. No further action is needed from you to accept such changes. However, if you would prefer to decline them, then you will need to close your Second Life account prior to October 31, 2022.

 

@Spots Linden 's equally hamhanded response  also sounds like a threat. 

When LL asks for agreement to this ToS on Oct. 31st, I recommend that they preface it with statements that are more meaningful to users, such as:

• If you do not "cash out" Lindens to real-world currencies, this version of the ToS makes no changes to your use of SL or the Marketplace. (is that true?) or maybe:
• With this ToS, LL/Tilia will now be empowered to use any financial information you have on file to pay any fee (such as tier) when it comes due. (is that true? This ToS seems to allow such conduct; does LL intend to change its normal operating procedure to do this?)

So, please, try prefacing each new ToS with something describing its actual impact.  In English, not legalese.

On 10/25/2022 at 10:48 AM, animats said:

Tilia/J.P. Morgan Payments

Just to be clear, JPM has not purchased Tilia, just invested in it.  Presumably the investment was large enough to justify giving them a board position, and frankly the cachet of JPM's name alone, and the power of being integrated with JPM payments, justifies doing that, from Tilia's perspective.

But as for the term "Tilia/JPMorgan Payments", you might just as well call them "Tilia/Fenway Summer".  Tilia is still its own company.

On 10/25/2022 at 4:59 PM, EliseAnne85 said:

They are based in Hollywood, that's probably why.  I think that's where that law started.  LOL

Are you referring to LL here?  It is based in San Francisco, which is a VERY different place from Los Angeles (where Hollywood is).

[animats]

1 hour ago, Nika Talaj said:

They (Tilia) are based in Hollywood,

Tilia's official HQ is nominally in San Francisco, at the same Battery St. address as Linden Lab. Like many companies, LL went remote during the pandemic and never came back to the office. Tilia's mailing address in West Hollywood, and Linden Lab's mailing address in San Francisco, are Earth Class Mail service centers, where mail is opened, scanned, and emailed to somewhere else. "Access postal mail anywhere with a virtual MailBox."

[Innula Zenovka]

23 hours ago, Rolig Loon said:

Well, no.  Although that sounds reasonable, your use of the word "gift" doesn't fit LL's definition.  They would consider that as a sale, and therefore against the TOS.  That one has come up before.  The fact that it would be almost impossible for LL to detect that you had in fact sold L$ is an interesting technical loophole, but it would still be a violation.

3.3. Linden Dollars may not be purchased or sold outside of the LindeX exchange.

Any purchase or sale of Linden Dollars through any means other than the LindeX is not permitted and is considered a violation of these Terms of Service which may result in suspension or termination of your Account.

Way back when I first started in SL (you and I started around the same time, as I recall) LL had authorised resellers of L$, outside the Lindex, and I made the mistake, in all innocence, of buying at an advantageous rate from someone who wasn't an authorised reseller.

Long story short, LL removed the L$ from my account (leaving me with a negative balance, because I'd spent a lot of them) and locked me out until I was able to persuade them it was an innocent mistake made by a newbie who didn't understand the rules.    They spotted this, as the Linden dealing with the matter explained, because their computer flags up suspicious transactions and they'd concluded the guy with whom I was dealing was an unauthorised L$ dealer.     Fortunately PayPal were able to recover what I'd paid him.    

Something similar happened to a friend of mine who didn't, at the time, have a credit card, and relied on her mother logging in once a month, buying some L$ and transferring them straight to her.   After a couple of months LL spotted when they regarded as a suspicious pattern and froze her and her mother's accounts until they were able to persuade LL there was nothing underhand going on.

So I wouldn't be too sure they can't detect this kind of violation, and Governance have only to prove it to their own satisfaction, not that of an independent court.

[Persephone Emerald]

54 minutes ago, Innula Zenovka said:

Way back when I first started in SL (you and I started around the same time, as I recall) LL had authorised resellers of L$, outside the Lindex, and I made the mistake, in all innocence, of buying at an advantageous rate from someone who wasn't an authorised reseller.

Long story short, LL removed the L$ from my account (leaving me with a negative balance, because I'd spent a lot of them) and locked me out until I was able to persuade them it was an innocent mistake made by a newbie who didn't understand the rules.    They spotted this, as the Linden dealing with the matter explained, because their computer flags up suspicious transactions and they'd concluded the guy with whom I was dealing was an unauthorised L$ dealer.     Fortunately PayPal were able to recover what I'd paid him.    

Something similar happened to a friend of mine who didn't, at the time, have a credit card, and relied on her mother logging in once a month, buying some L$ and transferring them straight to her.   After a couple of months LL spotted when they regarded as a suspicious pattern and froze her and her mother's accounts until they were able to persuade LL there was nothing underhand going on.

So I wouldn't be too sure they can't detect this kind of violation, and Governance have only to prove it to their own satisfaction, not that of an independent court.

There is an easy fix to this problem of course.

Make a object and sell it to your friend. Make several objects and sell them to your friend. Don't call these "Object". Give them a reasonable name like "art object # 1", etc. (I'm half joking here, imagining the absurdity of this scenario .) The person giving lindens could also add a note that it's a donation for something or gift to their friend, etc.)  LL might be suspicious of what you and your friend do inside of SL, but what you do out of SL is none of their business. 

The 2nd scenario you describe seems unlikely to flag LL if the person had the same IP address as her mother. If the IP address were the same, this would seem like someone transferring money to their alt. Did they not have the same IP address?

Edited October 28, 2022 by Persephone Emerald

[Innula Zenovka]

1 minute ago, Persephone Emerald said:

There is an easy fix to this problem of course.

Make a object and sell it to your friend. Make several objects and sell them to your friend. Don't call these "Object". Give them a reasonable name like "art object # 1", etc. (I'm half joking here, imagining the absurdity of this scenario .)  LL might be suspicious of what you and your friend do inside of SL, but what you do out of SL is none of their business. 

The 2nd scenario you describe seems unlikely to flag LL if the person had the same IP address as her mother. If the IP address were the same, this would seem like someone transferring money to their alt. Did they not have the same IP address?

As to the easy fix, I think that would depend on the sums of money involved and the pattern of transactions over time.    

As to your question, no, they didn't.  

[Rolig Loon]

2 minutes ago, Persephone Emerald said:

Make a object and sell it to your friend. Make several objects and sell them to your friend. Don't call these "Object". Give them a reasonable name like "art object # 1", etc. (I'm half joking here, imagining the absurdity of this scenario .)  LL might be suspicious of what you and your friend do inside of SL, but what you do out of SL is none of their business. 

That sort of trick is called "money laundering".  It's not particularly uncommon, and it's one of those things that the IRS in RL and the Governance Team in SL are familiar with.

[EliseAnne85]

4 hours ago, animats said:

Tilia's official HQ is nominally in San Francisco, at the same Battery St. address as Linden Lab. Like many companies, LL went remote during the pandemic and never came back to the office. Tilia's mailing address in West Hollywood, and Linden Lab's mailing address in San Francisco, are Earth Class Mail service centers, where mail is opened, scanned, and emailed to somewhere else. "Access postal mail anywhere with a virtual MailBox."

Oh, I just quickly glanced at the address but there is a phone number.

[Scylla Rhiadra]

Remember the utter mess that was made of the initial rollout of Tilia, and how poorly that was communicated?

Anyone else experiencing a sense of déjà vu about all of this?

[animats]

It's complicated.

When Second Life started, "virtual currencies" were petty cash things like World of Warcraft "gold" or iTunes points. But with cryptocurrencies now a trillion dollar business, and a very scammy one, regulation has been steadily tightening up and enforcement is getting stronger. So LL had to get serious about regulatory compliance. Hence Tilia.

And now there is a tie-in with J.P. Morgan Payments / Chase. Virtual currencies are gradually becoming subject to the usual regulatory requirements for handling other people's money. We can see Tilia / Linden Lab in transition here, with the Tilia terms and the Linden Lab terms out of sync. Tilia terms look like the bank-oriented future; LL terms look like the early Internet past. Over time, I expect that the US dollar account with Tilia will become a real bank account, or be tied to one, at least for larger balances.

(Also, pretending that the Linden Dollar has no value while making a market in it is probably going to draw regulatory attention at some point.)

These are good problems to have. Having a virtual world with an $850 million dollar economy is a big success. With success at scale, comes more responsibility.

[Dictatorshop]

For those concerned about the reserve (or whatever you want to call a the idea of a hold on linden fees for land/region tier due before you can cash out) the answer is pretty straightforward, own those assets in an alt separate from your business account that you use to transfer cash OUT of SL. 

I did that years ago after a friend of mine got behind on his mainland tier and they blocked his account until it was brought current.  The whole idea of that gave me some serious nightmares and so I moved my sims into an alt that I fund as needed and where the rent boxes for my tenants split the money off as it comes in.  It also gave me the added security of not having ANY vendors or money taking items attached to the 'banker alt' so no fears of somebody clearing me out with a money-stealing object by accident.  I had over a dozen sims in those days so it was more of an issue then.

I am of two minds about these changes, that whole "REFUND" thing sounds hinky to me.  But the realistic part of me figures it is *probably* lawyer speak of someone who knows law but doesnt know SL.  I have decided to adopt a wait and see attitude, but if it starts taking 30 days for me to cash out instead of the usual 3-5 days, there is going to be some seriously loud b!tch'in going to happen!

[Lindal Kidd]

16 hours ago, animats said:

pretending that the Linden Dollar has no value while making a market in it is probably going to draw regulatory attention at some point.

This is what has probably given LL's legal department ulcers for years. You're right...sooner or later it's going to bite them in the butt, and probably all of us as well.

[Ceka Cianci]

16 hours ago, animats said:

It's complicated.

When Second Life started, "virtual currencies" were petty cash things like World of Warcraft "gold" or iTunes points. But with cryptocurrencies now a trillion dollar business, and a very scammy one, regulation has been steadily tightening up and enforcement is getting stronger. So LL had to get serious about regulatory compliance. Hence Tilia.

And now there is a tie-in with J.P. Morgan Payments / Chase. Virtual currencies are gradually becoming subject to the usual regulatory requirements for handling other people's money. We can see Tilia / Linden Lab in transition here, with the Tilia terms and the Linden Lab terms out of sync. Tilia terms look like the bank-oriented future; LL terms look like the early Internet past. Over time, I expect that the US dollar account with Tilia will become a real bank account, or be tied to one, at least for larger balances.

(Also, pretending that the Linden Dollar has no value while making a market in it is probably going to draw regulatory attention at some point.)

These are good problems to have. Having a virtual world with an $850 million dollar economy is a big success. With success at scale, comes more responsibility.

I think the thing that separates it is, it only has value here in this world and not open to the rest of the world.. it doesn't impact any other economy but the second life economy..

Cryptos have a world value and can impact the real world markets..

 

[Istelathis]

I thought that Philip provided some interesting information regarding crypto vs linden in this video
 

 

If I understand this correctly, the value of crypto mostly comes from it being a commodity.  People are more likely to hold on to crypto, in hopes of the value increasing while linden is the opposite.  Just posting this video here, because I found that to be really interesting to note the differences between the two and it loosely relates to the conversation in this thread and some of you may likewise find it interesting.  

[Bree Giffen]

It looks by that video thumbnail that you have answered your own thread about what does a linden dollar look like.

[diamond Marchant]

53 minutes ago, Istelathis said:

I thought that Philip provided some interesting information regarding crypto vs linden in this video
 

 

I do not recommend this video as it may be misleading. Mr. Rosedale is not a financial guru (nor am I).

The primary difference between Linden Dollars and Crypto is that the former is controlled by a central authority and Crypto is decentralized (and much more susceptible to scams).

A Linden Dollar is regarded by many as simply a "gaming token" (digital or physical objects that can be used to represent a player's in-game currency).

Also, Crypto is not a "commodity". A commodity is a fungible asset that has an intrinsic value, such as oil, grain, or a precious metal. Warren Buffet considers Crypto (e.g. Bitcoin) as simply an "unproductive asset".

[Coffee Pancake]

16 minutes ago, diamond Marchant said:

I do not recommend this video as it may be misleading. Mr. Rosedale is not a financial guru (nor am I).

The primary difference between Linden Dollars and Crypto is that the former is controlled by a central authority and Crypto is decentralized (and much more susceptible to scams).

A Linden Dollar is regarded by many as simply a "gaming token" (digital or physical objects that can be used to represent a player's in-game currency).

Also, Crypto is not a "commodity". A commodity is a fungible asset that has an intrinsic value, such as oil, grain, or a precious metal. Warren Buffet considers Crypto (e.g. Bitcoin) as simply an "unproductive asset".

Comparing L$ to a block chain based token is really stretching things a bit, especially when talking about it like it is a currency in one breath and then claiming it as a virtual worthless monopoly tokens in the next.

Holding land in SL absolutely has commodity status and the lack of supply is intentional. Printing more mainland devalues mainland, which upsets land investors (who are getting a gift in the form of reduced mainland tier soon .. thanks LL!)

Philip's memory is somewhat rose tinted  .. Pepperidge farm remembers when they hired an economist to run the L$ like a real currency and the Lindex got infested with currency traders who almost crashed the entire economy. 

So called "stable coins" are only guaranteed to be stable right up to the moment they aren't. 

[EliseAnne85]

29 minutes ago, Coffee Pancake said:

a virtual worthless monopoly tokens in the next.

I believe that terms of service remark about virtual property or tokens are valueless is in the catastrophic event of a cyberattack because these things cannot be insured at this time in history.  No crypto nor virtual token is FDIC insured nor do most of those exchanges with mined crypto or ERC-20 minted tokens claim in their TOS that they will pay back investors, especially in terms of cyberattacks or bankruptcy.  Only FDIC money is insured up to a specific limit.  This is what they meant by that TOS clause, I believe.  No insurance.

Edited October 29, 2022 by EliseAnne85

[Coffee Pancake]

17 minutes ago, EliseAnne85 said:

I believe that terms of service remark about virtual property or tokens are valueless is in the catastrophic event of a cyberattack because these things cannot be insured at this time in history.  No crypto nor virtual token is FDIC insured nor do most of those exchanges with mined crypto or ERC-20 minted tokens claim in their TOS that they will pay back investors, especially in terms of cyberattacks or bankruptcy.  Only FDIC money is insured up to a specific limit.  This is what they meant by that TOS clause, I believe.  No insurance.

Just to be absolutely clear, the ToS states L$ is not money and it's a huge mistake to try and pretend the ToS doesn't really mean exactly what the ToS says. The circumstances or justifications are irrelevant.

Edited October 29, 2022 by Coffee Pancake

[EliseAnne85]

23 minutes ago, Coffee Pancake said:

Just to be absolutely clear, the ToS states L$ is not money and it's a huge mistake to try and pretend the ToS doesn't really mean exactly what the ToS says. The circumstances or justifications are irrelevant.

Yeah, I know but has it ever really been "money" in the money sense?  What the linden is is helpful in that creator's don't have to take every fiat currency there is nor do they have to deal with all the mayhem that would cause if they had to accept every fiat currency there is.  Let alone try to price everything in every fiat currency from the countries that are accepted in SL.

SL has been here near 20 years.  Many of us took the risk and the risks are not that large if viewed in the scope of nearly 20 years.  But, they have to put those clauses in to cover their buttocks in the event of an unforeseen catastrophe.  

Edited October 29, 2022 by EliseAnne85

[animats]

Ah, the "what's a currency" issue. Here's the current IRS position.

Q1.  What is virtual currency?

A1.  Virtual currency is a digital representation of value, other than a representation of the U.S. dollar or a foreign currency (“real currency”), that functions as a unit of account, a store of value, and a medium of exchange.  Some virtual currencies are convertible, which means that they have an equivalent value in real currency or act as a substitute for real currency.  The IRS uses the term “virtual currency” in these FAQs to describe the various types of convertible virtual currency that are used as a medium of exchange, such as digital currency and cryptocurrency.   Regardless of the label applied, if a particular asset has the characteristics of virtual currency, it will be treated as virtual currency for Federal income tax purposes. 

Note the phrase "regardless of the label applied". What LL calls it doesn't matter. It's possible to incur a US tax liability without ever cashing out Linden dollars. Once you get past the US$600 threshold for miscellaneous income, you're going to have to account for Linden dollar transactions for tax purposes.

Virtual currencies are treated as capital assets for tax purposes.That suggests what some of the big landlords may be doing. If you have ordinary income from some other source, you can buy SL land with it. If you hold the land for a year or more, then sell it, you've converted ordinary income to capital gains and can get a much lower tax rate. This may be why there's so much vacant land in SL owned by landlords. It can be used as a tax shelter.

Game currencies and such used to be a tiny thing mostly ignored by tax agencies and financial regulators. Because of the crypto boom and bust, big numbers being involved, big losses, everybody has had to get serious about how all this is regulated, taxed and secured. It's not play money any more.