The subprime crisis has nothing on the economic implosion hitting Second Life’s virtual economy, the Wall Street Journal reports. Linden Labs has shut down most of the banks in its online game, cutting users off from real-life cash they'd invested. That caused a very real bank run, with avatars swarming to ATMs, sometimes to find them disabled.
Linden closed the “banks,” run mainly by ordinary users, over complaints they weren’t paying the interest rates they’d promised. Now, all banks will need some real-world documentation, an admission that Second Life’s economy needs regulation. One fallen bank alone cost users $750,000. “There is not a whole lot fake about this,” said one business professor and Second Life devotee. (Read more Second Life stories.)