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Twitter and Virtual Games offer money laundering potential

Monday 6th July 2009
Twitter and Eve: online networks working with real money

Back in 2007 an article on virtual laundering pointed out that money launderers could move illicit cash through a growing number of virtual reality role-playing games, convert that cash into real currency and withdraw it from ATMs worldwide. The virtual money stolen and cashed in at EVE Online (300,000 subscribers paying $15/month) and the development of the uSocial.net service allowing Twitter users to purchase packages of followers if they are having trouble attaining them on their own, are an interesting heat up of the laundry potential.

Facing real world debts, an individual in EVE Online, stole money from the virtual bank he ran and exchanged it for cash through the black market.
It happened, where more than 300,000 subscribers pay $15/month to play. They gain wealth through hard work, manipulating the market, or killing rivals in a distant future where humans have colonized the stars in an online game similar to World of Warcraft and Second Life.

EBank, EVE's largest player-run financial institution which has thousands of depositors, is at the center of the scandal. "Basically this character was one of the people that been running EBank for a while. He took a bunch of (virtual) money out of the bank, and traded it away for real money," said Ned Coker, of the Icelandic company CCP, which developed the game.

The CEO of EBank, a 27-year-old Australian tech worker identified only as Richard with the online name Ricdic, embezzled about 200bn Interstellar Kredits, the game's virtual currency, breaking the game rules exchanging the stolen virtual funds for $6,300 with players who preferred to buy virtual money rather than earn it playing the game. "It was a very on the spot decision," the married father of two said in an interview.

A spam email for a black market website that traded online money for real cash popped up on his screen, prompting him to exchange the virtual cash for real money to cover a deposit on his house and expenses related to his son's medical problems. "I saw that as an avenue that could be taken, and I decided to skim off the top, you could say, to overcome real life (difficulties)."

Word of the theft spread quickly within EVE. Panicked customers started a run on the bank, worried that they would lose the money they had amassed by hunting space pirates or mining asteroids.

Ironically, if Ricdic had merely stolen the online money he could have stayed in the game. But exchanging the virtual cash for real dollars broke the rules and CCP banned Richard's EBank accounts. "It unbalances the game," Coker said.

Players can only buy virtual money with real money, or use virtual cash to pay for playing time, but they cannot exchange game money for the real thing.

The user money behind Twitter
First it was popularity on social bookmarking sites like StumbleUpon that was being sold and now Twitter is in the sights of those looking to have their fame and status artificially increased.

Web traffic and promotion company uSocial.net – who famously received and ignored a Cease & Desist order from Digg after selling votes on the site – have launched a service allowing Twitter users to purchase packages of followers if they are having trouble attaining them on their own.

Starting in packages of 1,000 and going up to 100,000 followers, the company launched the buy Twitter followers service not long ago with what they say was a massive response. “It was obvious people had been looking for a service like this for some time as the day we launched we actually had to start turning people away before close of business,” said uSocial CEO Leon Hill. “It was a shock, but within a couple of days we revamped our systems to ensure we could handle the workload.”

uSocial themselves own three of their own Twitter accounts which have all been active for only seven weeks and each of them number between 8,000 and 14,000 followers, totaling over 30,000 people following their activities. It was the methods they used to create this large follower base in such a short amount of time that they now use on their clients accounts.

“We’ve had everyone from churches and automotive blogs, to Fortune 500 companies express interest and invest in our services,” said Hill. “And with the growing popularity of Twitter, we can only see an even larger variety of organizations and businesses jumping on the bandwagon.”

The service is the second offered by uSocial that works on unnaturally increasing rankings or popularity on a social site. Upon their launch in December of 2008 the only service the company offered was their paid social bookmarking services which allowed clients to purchase votes on sites like Digg and StumbleUpon. While they do now offer other services such as press release distribution, it seems their artificial popularity services are by far the most sought after.

“We have gotten some bad feedback about some of our services, though we do get a lot more positive than negative response,” said Hill.

uSocial no longer offer the paid social bookmarking services on their site as they state they have a large number of regularly contracted corporate clients who fill all their available slots. Despite this, Hill says they will be reopening this service for new clients very soon.
Usocial Twitter.

Virtual money laundering
Money launderers can now move illicit cash through the growing number of virtual reality role-playing games, and convert that cash into real currency before withdrawing it from ATMs worldwide. Compliance officers at financial institutions please note that their banks may be guilty of money laundering if it facilitates deposits or payments in these virtual worlds, for there is no functional due diligence on players or recipients.

Some virtual games allow players to convert real dollar deposits to virtual dollars, and back to real dollars at a fixed exchange rate of, for example, ten to one, and to withdraw those funds, using many of the automated teller machine services available globally. Players are given an ATM card,(in essence a re loadable debit card) by the game manager and pay regular service charges on the same to the operator of the virtual reality website.

This is now a potential money laundering problem, as one can set up an account, send in identification, as a bogus drivers' license and altered utility receipts, fund the account with the proceeds of crime, and have an associate on the other side of the world withdraw funds as profits, or even as working capital for a criminal enterprise. 

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