Laws surrounding online currency are developing fast, explains game lawyer
An IT businessman is facing a substantial prison sentence after pleading guilty to stealing around $12 million in online game currency.
Ashley Mitchell, 29, based in the Devonshire costal town of Paignton, admitted to hacking into the accounts of social gaming giant Zynga.
He transferred around 400 billion virtual poker chips into his account and began selling the currency on the black market. He had made £53,000 before his arrest.
Mitchell stood to make around £184,000 from the chips, the court heard, though Zynga’s sale value of the currency is $12 million.
Judge Philip Wassall said Mitchell faced a substantial jail term for the offences, according to regional paper Herald Express.
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Mitchell was remanded in custody after the case was adjourned for reports.
The actual value of Zynga’s intangible and instantly replicable online currency sparked a debate in court.
Prosecutor Gareth Evans said Zynga had not been, in essence, deprived of any goods. He claimed there may be a knock-on effect as more customers bought the poker chips on the black-market instead of paying Zynga.
Judge Wassell asked if the case was any different from stealing notes from the Royal Mint – the UK’s body that manufactures British currency.
Prosecutor Evans replied that, in theory, there was no difference because the mint can produce more currency if its goods were stolen.
He said there is, however, a difficulty in valuing the chips because they are digital. But if Zynga had sold them legitimately the value would have been around $12 million.
Jas Purewal, lawyer and author of Gamer/Law, explained to Develop that the case has set a new precedent.
“This shows that the legal regulation and protection of virtual goods and currency, which historically has been fairly uncertain, is evolving fast - driven partly by the boom in virtual goods sales in games.
“This case is particularly interesting because it involved a UK court recognising virtual currency - in this case, Zynga chips - as legal property which can be protected by existing UK criminal laws.
“The court effectively found that, even though virtual currency isn't real and is infinite in supply, it still can deserve legal protection in the same way as real world currency”.
Purewal said the case is a “vindication” for Zynga and other virtual goods providers.
Judge Wassell heard that Mitchell’s offences were in breach of a previous suspended sentence he was handed in 2008.
Mitchell had previously been convicted of hacking into the Torbay Council website and changing his personal details.
Defence solicitor Ben Derby said as a plea in mitigation that Mitchell had been “wrestling with a gambling addition” at the time of the Zynga theft.
So really, he stole about $150,000 worth of virtual goods, not $12M. Zynga's speculated value doesn't carry much weight. They could speculate that the gold could have been invested in the game to produce $1 trillion dollars.
If sold under normal circumstances they'd be worth $12m - that much was stolen.
What Mr Mitchell re-sold, at black-market discounts, would have amounted to £184,000.
It's like selling £5 notes for £1, and that's the issue that had arisen in the court case - the law needs to evolve to a digital world.
Happy to change any headline, but you're wrong about it being sensational, so I'll leave it this time.
Agreed. It's the same as if you steal some 70 quid trainers from a shop and sell them for a tenner. It's still stealing. And you still sold 70 quid trainers, regardless of how much you sold them for. Kind of obvious, no?
Well, no, because "stealing" imaginary stuff isn't the same as stealing real stuff and actually depriving someone of it.
These games take lots of engineers, artists, it people, servers, electricity, etc. and are enjoyed by many people. That's like saying it is okay to steal other forms of entertainment because they are imaginary. Would you say the same about movies, music, amusement part rides? They all take work by real people to produce, and therefore need to be paid for.
When you steal stuff, regardless of if it's virtual or not - you are depriving the SELLER of a sale.
You are basically legitimising the theft of anything digital, because it does not exist in the physical world.
$12m is a huge value of goods. Because it's Zynga, who have loads of money, you assume this is okay. Imagine if this was a small developer, such as is with Minecraft, and $12m worth of sales walked out the door. Ouch.
But it's okay in some minds I guess, because the Minecraft dev was selling goods virtually, rather than boxed copies. He hasn't really lost anything, he should be thankful for the guys that paid legitimately?
We are talking about money, not goods. You can't eat it, you can't wear it. But you can exchange it. So, isn't "real" money just as "virtual" as Zynga money?
Yip what Mike says is true what we call real money is essentially virtual anyway it is just a promise to pay a value and we use it instead of barter out of convenience. Coins came about because originally the value of the coin was in the value of the gold or silver it contained and so the concept of money began. This was still sort of true until the end of the gold standard. If you steal something of value that can be exchanged for something else of value it is stealing. I hope he does a lot of time something like this could sink small devs. Incidently the ONLY legal tender in the UK is the £1 coin everything else if just legal currency and can be refused by anyone who doesn't want to accept it.
I just had a thought - what this guy did was equivalent to cloning or counterfeiting the chips isn't it? He didn't remove physical goods, but he fiddled the numbers or essentially gave himself counterfeit chips - chips which didn't move accounts but just became available to him - kinda out of nowhere.
I wonder if that aspect was considered?
The reason I say that is presumably he went in to his account and simply credited himself with more chips than he actually had.
This would be like hacking your own credit card account and removing any debt you had and then adding credit to the account, so you could go spend some on something, without actually spending any money.
In physical terms his crime is absolutely the same as serious fraud or theft.
They are suing him as "virtual currency should be equivalent to real money" but I think they should go the intellectual property route and sue him as piracy and theft of property that has value.
Selling the virtual currency that Zynga would normally sell for $12M is not like $12M if you were a third party reseller. In Zynga's TOS, it states:
"Accordingly, you may not trade, sell or attempt to sell in-game items or currency for "real" money, or exchange those items or currency for value of any kind outside of a game, without Zynga’s written permission. Any such transfer or attempted transfer is prohibited and void, and will subject your Account to termination."
The reason behind Zynga not allowing their virtual currencies to be exchangeable for real world currencies is because then they would have to answer to federal regulatory agencies such as the Federal Reserve, or the Nevada Gaming Comission.
You can imagine why Zynga wouldn't want to comply to federal regulations in a similar way a casino, or a bank would given their shady business ethics they've practiced in the past.
Until Zynga decides to make their currency similar to the Linden dollar, their 12M in poker chips are just the equivalent to $12M in chuck-e-cheese tokens, or monopoly money.
If anything, they guy should be prosecuted for hacking their servers, if he did, and suspended from the game, since you aren't allow to sell the chips anyways.
What is to stop a company from starting up with a crafty TOS, overpriced Virtual Goods, and low security, with code that's riddled with bugs with the idea they are going to profit off people who put their hands in the cookie jar?
ineed chips pokeer plz
poker plez i need free 12mililons
Pls give me some chip
