(Originally posted at SLNN.COM

Slowly, a more complete picture of what has happened with Hope Capital Bonds not making their bond interest payment on November 2nd and the ripple effect it has had is becoming available.

On August 16th, Hope Capital announced a bond issue that would pay 20% interest per quarter with the first interest payment due November 2nd.

On November 2nd, the interest payments were not made. SL Reports had an article in which Midas Commons claimed that the Hope Capital’s failure to pay interest account for an immediate loss of L$ 650,000 and had a potential affect of as much as a L$ 5 million loss. This placed Midas Bank “in limbo”.

The following day, the World Stock Exchange (WSE), which is owned by Hope Capital, announced Bankruptcy of Midas Group.

On November 12th, IntLibber Brautigan issued a statement on behalf of the Second Life Exchange Commission (SLEC) calling on SLEC related companies to delist from the WSE.

On December 5th, there was an open meeting of the SLEC to discuss IntLibber’s statement and the future of the SLEC, including any further actions against WSE and any possible changes to the make up of the SLEC.

On December 19th, Hope Capital issued a statement saying that on October 16th, they informed people that they would not be able to meet their interest payment on November 2nd. No link to the October 16th statement has been provided.

According to a blog post yesterday by Lindsay Druart, the following day, December 20th, Luke Connell Vandeverre informed her that three “Midas depositors had hired Stevan Lieberman of Greenberg and Lieberman, LLC claiming damages from the World Stock Exchange in response to its default on bond payments causing the supposed bankrupt”.

Stevan Lieberman, a Washington DC based lawyer who focuses on intellectual property issues and who is a member of the Second Life Bar Association, the Law Society of Second Life, and related groups, has confirmed that his “offices have been engaged by depositor(s) of Midas Bank”

It would appear as if the statement by Hope Capital on the 19th may have been prompted by the beginning of legal action.

On January 6th, WSE announced that were closing for an upgrade. Many people wondered how an exchange could justify closing for an upgrade. Normally, software upgrades are tested ahead of time and are presented to the end user seamlessly. Two days later, Linden Lab announced their new policy regarding in world banks.

As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter

Many people have questioned the timing of WSE’s announcement two days before Linden Lab’s announcement. People have suggested that WSE was tipped off . Ms Druart speculated that “that Linden Labs received a subpoena for account information in relation to the Midas depositor’s case.”

The new policy resulted in many articles about the new policy as well as runs on various banks and exchanges. The Second Life Capital Exchange (SLCapEx) experienced major withdrawals prompting them to disable ATM withdrawals They issued a subsequent statement about their financial status which included other options for making withdrawals.

The Virtual Stock Exchange (VSTEX) issued a statement about holding a 100% reserve. On the first day, they experienced net withdrawals of approximately L$ 165,000, with additional net withdrawals on the following days of approximately L$ 20,000. It is worth noting that during this period there has been over L$ 425,000 new deposits made to the Virtual Stock Exchange.

They choice of January 22nd has also brought about additional speculation. Was this date chosen because of dates in the legal proceedings? Is this a date that is flexible? What position will Linden Lab take regarding the exchanges in Second Life.

Over the coming days additional information about what has happened and what is likely to happen in the future is likely to become available.