A Virtual Bank With Real-World Woes

The New York Times ^ | June 15, 2009 | Rob Cox

[1rudeboy]

Uh-oh! Another big bank is the subject of a depositor run amid charges its chairman has run off with customers’ money. Thankfully, this scandal is taking place in Eve Online, a space-age virtual reality created by CCP, a games developer and Iceland’s coolest company. But these troubles in the ether may offer some valuable lessons for earthly banking and regulation.

Eve is one of the more successful multiplayer online games. Some 300,000 people — as it happens, nearly equal to the population of Iceland — pay $15 a month to navigate characters that pilot intergalactic spaceships, manufacture and trade goods, mine resources and enter into big alliances, or bloody battles, with one another.

Central to Eve’s strategy, players develop economies within an “anything goes” free-market framework that allows them to expand their fleets, buy weaponry and equipment and bolster defenses. Indeed, Eve has 66 marketplaces for some 5,000 items, with more than a million transactions a day.

Enter Ebank, this virtual universe’s online bank. Because players often do not have the interstellar credits — abbreviated to ISK, also the official abbreviation of the Icelandic kroner — they need to expand their fleets, an enterprising player created a bank that would accept deposits and lend to players who would pledge assets, like their spacecraft, as collateral.

The bank was a success. According to its Web site (yes, it has one), Ebank accumulated about 8.9 trillion ISK in deposits in 13,000 accounts belonging to 6,000 users. That was far more than it was able to lend out — there were around 1 trillion ISK of loans.

Somewhere along the way Ebank’s top executive, who went by the online handle Ricdic, apparently got greedy.

[1rudeboy]

Rumor has it that this guy made a few grand (USD).

EVE Online
EBANK

[1rudeboy]

EBANK's side of the story:

There are a number of wildly inaccurate news stories floating around right now about EBANK. The most common one claims that EBANK had 8.9 Trillion ISK in deposits or that the Chairman committed the theft. Ricdic was the CEO, not the Chairman and at most, we've had 2.5 Trillion in deposits. Also, the Bank run has ended for the most part and we have not been forced to tap other lines of capital infusions. We are very well capitalized at the moment and withdraws are being processed within our 48 hour SLA.

I love this stuff, you can't make it up.

[rarestia]

This is a video game, however, corporations can grow to sizes unseen in the real world, and there are gigantic consequences to poor management.

I played EVE for the free trial. Loved the game, the graphics, the play, but the price, as MMOs go, was ridiculous. This game is run by Germans, and I guess they have some tax scheme in place there, as there’s a $5 online transaction fee with no way to buy otherwise. Why pay $21 to play EVE, when WoW is only $15 or less, depending on how many months you buy.

[1rudeboy]

Were you paying in dollars, or euros? The "transaction fee," was it the VAT?

The game costs $14.95 (US) per month for those comfortable with giving an Icelandic company with servers located in England (where did you see Germans?) their credit card number.

If you dislike using your credit card, outfits such as Shattered Crystal sell 60-day timecodes for $34.99 (US). No transaction fee at either end (again, if you pay USD and are located in the US).