Imagine that a foreign criminal desires to bring tainted money into the United States. Traditionlly, this transaction confronts many obstacles, including the need to physically relocate money over borders, requisite taxation, and compliance with reporting standards for business and financial institutions. [Real Money Trade] significantly overcomes these obstacles. For example, consider moving $500,000 to two different U.S. cities.
First, a foreign criminal buys $500,000 worth of virtual currency for a certain virtual world. Depending on the virtual world, it is possible to purchase through third parties with minimal recording of the transaction, and the absence of personally identifialbe information required for an international wire transfer. After the criminal obstains the virtual currency, he can gain access to the virtual world and distribute that currency to two other player accounts. One account is for an associate in New York; the other, for an associate in Los Angeles. Those associates can now use a third-party transaction to "cash out" the virtula currency. All of these transactions can be completed in less than 24 hours.
In other words, real money becomes virtual money, which then again becomes real money, and the only oversight is provided by the entity that makes the transaction possible, the company that provides the servers and the process for the virtual world used to facillitate the transaction. Now the authors point out that there are so far no reported instances of anyone completing any such transaction, but given how difficult it would be to detect a clever criminal, that's no surprise. However, here are some less theoretical examples of incidents that, had they taken place in the real world, would be considered securities fraud:
A seminal example in one virtual world was an event know as "The Great Scam." A player character named Nightfreeze convinced several other players to invest in a plan to purchase a game item that individually they would have been unable to purchase. The outcome of the scheme was that Nightfreeze and his accomplice walked away with assets that had an estimated real world value of $1000.
This scheme, however, pales in comparison to the in-world bank scam that occurred in the same virtual world earlier this year. One subscriber established himself as a bank in the virtual universe. He attracted customers in much the same way an offline bank would, by offering a percentage return on the deposits in the bank and the promise of security. In this case, however, the promise of security was illusionary. And, unlike offline banking in the United States, there was no safety net when he decided to walk away with all of the money. The result was that he took assets valued at $170,000, and all the users who had made deposits were out of luck.
To date, neither of these schemes has led to any punishment of either of the perpetrators.
The lesson is, player beware. Naivete can cost you virtual money or property that has real-word value.
Also, this article makes clear that the virtual world is becoming not only a haven for clever criminals, but also for "terrorists":
In an explosive display, virtual-world banes now mirror the havoc of the real one as terrorists have launched a bombing campaign in Second Life.
People controlling animated avatar members of a self-proclaimed Second Life Liberation Army (SLLA) have set off computer-code versions of atomic bombs at virtual world stores in the past six months -- with their own manifesto.
The SLLA claims to be an "in-world military wing of a national liberation movement" devoted to replacing the rule of Second Life creator Linden Labs with a democracy representing the nearly four million residents.
"As Linden Labs is functioning as an authoritarian government the only appropriate response is to fight," the SLLA said in a message on its website at http://secondlla.googlepages.com.
Computer geeks with too much time on their hands? Probably...for now. I don't know if we'll ever develop virtual reality to the extent that is celebrated in cyberpunk fiction and cyberpunk inspired games and movies, but as the processing power and storage capacities of computers continue to increase, it's hard not to imagine that vast online worlds will be created that are more and more capable of mimicking "real" life. And that humans, ever creative beings, will take their aspirations and their mischief to those worlds as well.