(Originally published at SLNN.COM)

Following Linden Lab’s ban on unregulated banking in Second Life, there was some concern about whether or not they would shut down the exchanges as well. Now, two months later, it looks like the exchanges may be doing a good enough job of that themselves.

Shortly before Linden Lab announced its ban on unregulated banking in Second Life, The World Stock Exchange (WSE) announced that it would be shutting down, temporarily, for software updates. Today, over two months later, WSE is still not functional. Instead, they are busy delisting companies from their exchange, and angering even more CEOs and investors.

Spontaneous Rich Investments (SRI) was one of the companies delisted. Spontaneous Rich, CEO of SRI had been investigating taking the company private. When LukeConnell Vandeverre learned of the plans, he contacted Mr. Rich informing him that SRI would be delisted.

Today, WSE announced the delisting. A flurry of condemnations took place on various blogs and rumors grew about other companies planning to either move to other exchanges or take themselves private.

The other exchanges have not been immune to problems in the financial markets. In mid February, a fight emerged between Atlas Virtual Capital (AVC) CEO Monkey Canning and his CFO, Mike31 Dawes. This resulted in AVC trading being halted on the Virtual Stock Exchange (VSTEX) as various allegations began flying. People claimed that various residents were alts for Jasper Tizzy and Investor Merlin, people who had been involved in previous financial markets issues.

An investigating committee was formed and they recently produced their findings. The shareholders of AVC are now considering what their next move will be. It has been delisted from the VSTEX and Monkey Canning is trying to gather support to get it relisted on the Ancapistan Capital Exchange (ACE).

Concurrent with this, The Second Life Capital Exchange (SLCapEx) changed all investors cash balances into shares of ‘SL Wallet’, effectively depriving investors of half the value of their investments. Commentators compared this to when Ginko Financial changed all of its deposits into Ginko Perpetual Bonds on the World Stock Exchange. Like Ginko, SLCapEx promises to buy back the securities.

To further complicate matters, SLCapEx recently shut down its webservices. Until a few days ago, it was possible to retrieve from SLCapEx a small file that contained the bid, ask and last price for all the stocks listed on SLCapEx. Numerous people started extracting this information to create their own tickers and databases of stock prices on SLCapEx.

Officials at SLCapEx maintain this was done to shutdown ticker boards in Second Life, which they say have been banned for some time and the intention was not to shut down the data feeds. At this point datafeeds are still shutdown and SLCapEx’s data transparency is closer to that of WSE than of other exchanges.

Meanwhile, someone been messing with the (ACE) Domain Name System (DNS) records. These records control which computer server will handle requests for webpages for various sites. Initially, the DNS records were pointed to the VSTEX servers, and then later at to an article on Your2ndPlace about the DNS problems. The records were updated yesterday and list IntLibber Brautigan, CEO of ACE as the administrative and technical contact. However, the address and phone number associated with are in England.

The only stock exchange that seems to be immune from these various problems is the International Stock Exchange.

People have accused the stock exchanges or the companies listed on them as being scams and people that trade on these exchanges as either gamblers or suckers. It may well be that some of the exchanges themselves are scams and others are havens for scammers and displace gamblers. However, the financial markets in Second Life still has the potential to provide funding to small companies wishing to get started and opportunities to invest for people that don’t want to have to deal with frequently moving money out of Second Life into traditional currencies.

However, the fear remains that Linden Lab may crack down on the exchanges or the exchanges may collapse on their own. Unless the exchanges start working more closely with investors and corporate officers, the potential of financial markets in Second Life may remain unreachable.