Greedy Goblin

Wednesday, October 14, 2015

Donating some ISK to the Islamic State

Let's say I have 17 million dollars. I spend it all on PLEX-es, getting about a million pieces. Then I sell the PLEX-es for ISK, getting about 1 quadrillion ISK (million*billion). Then I donate all this in-game ISK to a pilot controlled by an Islamic State terrorist. When he has a hole in his busy schedule between beheading an aid worker and raping a 12 years old slave girl, he cashes out the ISK on the RMT market for $9.2 per billion each. This way he gets 9.2 million dollars that he can spend on his affection for Toyota pickups, black clothing and firearms:

Finally I post it all with my real name, along with his thanking latter written with blood of their latest victim. The fun question is "what will happen to me then"? And the answer is "some bad press". Maybe people will place plush Yazidis at my door in impotent rage, but I wouldn't have any trouble with the law for openly supporting the worst contemporary genociding terrorists. Oh wait, I'd probably lose my EVE account.

Why? Because in-game currencies and items, including EVE ISK, are not considered real. People might think that I gave something to the Islamic State that they could sell for $9.2M, but the judge will say that I merely played a video game with one of their members, which can be distasteful, but absolutely not illegal. The only ones getting into legal trouble would be the ISK buyers as they indeed wired real world dollars to the Islamic State and then desperately try to explain that they didn't mean it as a donation but they did it for the privilege of having some bigger pixels in a video game.

You might say that this is an extreme plan, as no one could move a quadrillion ISK without CCP banning him before he could get some cash. Let's say you are totally right. But then think of something smaller: a drug dealer who supplies local nerds and accepts payments in video game currencies which he sells for RMT-ers. If the cops would catch him, he could say "I never got a dime for any of it, I just gave some of my own joints to my friends with whom I play games". And he would be sentenced for shared using instead of business-like drug dealing. Or think of a whorehouse serving nerds which isn't a whorehouse since the patrons pay nothing, they merely play a video game with the girl after succumbing to their mutual affection. Each transaction is just a couple hundred or thousand dollars worth of game currency, clearly in the range of usual in-game transactions between players.

Real world sports and games have long history of regulations to prevent this. Betting on a boxing game is illegal or heavily regulated. Cheating in poker in a casino is a felony. The international agency WADA is hunting those who try to "bot" in sports and anyone caught is banned from all kinds of sports. On the other hand if you do any of these in a video game, nothing happens. You can rig games, place bets, cheat, sell bots and if caught, the worst case you lose your disposable accounts from one game.

Update: There is already research showing that criminals are loundering money in video games. I don't have evidence for the Islamic state being involved. But the possibility is there and it's completely legal. The lawmakers simply didn't follow the IT boom and many parts of the online world became lawless lands. How could this mess be prevented/cleaned up?

Video games must be recognized as art or sports. If it's art, than owning a piece of art is real world ownership. A bunch of random paint placed on a surface by Picasso worth millions of dollars. Giving such painting to terrorists is clearly illegal support. Sure, it would be quite a legal work to sort out who owns what and there would be lawsuits between players over PvP, but it could be done.

I'd rather recognize video games as sports. This case the gaming items are not real world property (you can't own a touchdown) but attempting to cheat, bot or deviate from the official rules as developer would be treated as doping or unlicensed sport organization and hunted by an international organization that has access to all logs and has the authority to ban you from all games. Trying to cash out would be considered illegal betting and a felony.

Either way, video games are real. People are ready to pay lot of money for pixels and the law must follow them.

15 comments:

Jim L said...

Since you are not a lawyer you probably shouldn't be giving legal advice.

In the U.S. there are plenty of examples of digital property being recognized by the law. Furthermore, terrorism and money transfer laws are sufficiently broad to cover digital transfers such as ISK or Plex. If an American citizen transfers thousands of Plex to ISIS, they can be charged with supporting a terrorist group.

bluto said...

I have never understood how the courts allow a entries in a game database to be treated as legally different than entries in a salesforce.com database.

Gevlon said...

@Jim L: care to cite one of the plenty of examples when in-game property was recognized as property? There is no doubt that if I'd give them game codes (service coupons), I'd be in trouble. But what about in-game ISK. Or veldspar?

Anonymous said...

IANAL but I don't think it quite works this way.

Last month the FBI arrested someone for retweeting an ISIS tweet, so I don't think they would consider an ISK donation a stretch.

Since the 1960s, the IRS cracked down on barter, where the point was to say there was no income since no money was paid. Receiving value is the trigger, not receiving money.

The digital property that is getting a lot of attention is bitcoins. And the IRS ruled it is property not currency and buying and selling them causes capital gains/losses. Bloomberg.com: "The U.S. government will treat Bitcoin as property for tax purposes, applying rules it uses to govern stocks and barter transactions, the Internal Revenue Service said in its first substantive ruling on the issue.
Today’s IRS guidance will provide certainty for Bitcoin investors, along with income-tax liability that wasn’t specified before. Purchasing a $2 cup of coffee with Bitcoins bought for $1 would trigger $1 in capital gains for the coffee drinker and $2 of gross income for the coffee shop.
"

johnhoward said...

I don't think its much of an issue in eve online. Second life on the other hand, where massive amounts of real world currency change hands has a lot more leeway for money laundering.

Anonymous said...

i guess the problem is that ccp doesn't do the cash-out (you cannot get $ from ccp), so they are not subject to money laundery rules.
but even if they were, there are enough examples where paying a fine is enough.
http://www.bloomberg.com/news/articles/2013-07-02/hsbc-judge-approves-1-9b-drug-money-laundering-accord

Anonymous said...

Given you don't have any evidence of criminals using video games to launder money how do you know they wouldn't be convicted of a crime if they did so?

We know the security services monitor video games in an attempt to detect criminal activity. We also know that you can be convicted of conspiracy irreverent of the medium you use to undertake that conspiracy.

dobablo said...

Trade is not restricted to hard currency payment for goods. Payment can also be made via goods or services.
By the way, when it comes to the exchange of illegal drugs it is the quantity that decides the seriousness of the offence not the transaction price.

Gevlon said...

There is no doubt that giving bitcoins or a painting or hammer to them is financial support. It is also without doubt that if I chat about terror attacks in any media (including a video game), I'm liable.

What I'm talking about here is giving them in-game items that has no monetary value by the law.

Does anyone know of any case when someone was convicted for money loundering using video game currencies? If not than either no one is doing it (unlikely, considering the amount of RMT going on), or it's not illegal/not catchable. Second Life doesn't count, because they have an official rate, so Linden Dollars can be interpreted as checques against a company. But CCP games claim that in-game ISK or in-game spaceships have no monetary value and they give nobody any money for ISK, just free playing opportunity by PLEX-es (which cannot be used for terrorism).

@dobablo: when you and a buddy smoke a pot together, you are both drug users, regardless of which one of you had the pot. Both of you will likely get away with a mandatory rehab.

Mr Tingla said...

This isn't something new you have spotted.http://www.wired.co.uk/news/archive/2013-10/21/money-laundering-online

CCP saying something has no value does not mean that is a fact. Legally they own everything eve but we aren't talking legally are we. Something has value if people are willing to pay for it. That's really as simple as it gets. And in the case of money laundering any amount of lies and dodging doesn't make it legal. I would bet a talented prosecutor would have no problems.

The problem may be in that due to the nature of digital assets the paper trail can be disguised and may lead outside the court's jurisdiction.

One interesting addition is the price of buying isk illegally. If we can figure out how the isk buyers are farming isk and therefore get an isk/hour for them. We could work out how much they can move per day for example if demand is 100% of supply.

This is interesting because a money launderer does not care about cost. They will pay you $5 to disguise the $5 they need laundering. If the profit per hour is low (which I am pretty confident it is) then you can be pretty damn sure money laundering is rife.

Anonymous said...

I doubt anyone is actually dumb enough to think that laundering money through a game like EVE is actually untracable, and dumb enough to not simply use one of the many other methods of laundering that doesn't require you to mess around with the market and selling PLEX illegitimately to transfer cash.

Your suggestion that because nobody has an example to hand of someone getting caught being proof that people are getting away with it is truly madness.

And mandatory rehab for pot? Not likely. But if either one of you has over the threshold for personal use, money changing hands or not, you're going away for a while.

Gevlon said...

No one said it's untracable. I said not criminal. It's like designer drugs: since the formula is not forbidden, you can't get into trouble selling it. Nobody getting caught is the definition of people are getting away with it.

Anonymous said...

@dobablo: when you and a buddy smoke a pot together, you are both drug users, regardless of which one of you had the pot. Both of you will likely get away with a mandatory rehab."

That's not what he was saying. In the USA, there are predetermined amounts of drugs that an individual can have that will determine whether he will be charged as a user or a dealer regardless if the police caught the person actually selling or not. If I have a quarter ounce of coke (2 eight balls) on my possession and get caught by the police, they are going to charge me as a dealer. If my buddy had a gram of coke, they would charge him as a user. My buddy would most likely get rehab, I would probably get 5 years in prison if I have had prior charges.

Anonymous said...

"No one said it's untracable. I said not criminal. It's like designer drugs: since the formula is not forbidden, you can't get into trouble selling it."
It's nothing like that, since it is actually illegal to provide funding to terrorists or sell illegal drugs. What you're saying is that because one step in the middle of that isn't illegal that stops the police being able to do anything, which is madness.

"Nobody getting caught is the definition of people are getting away with it."
No it's not. Nobody has been caught growing pot on the sun, that doesn't mean someone's up there growing away and laughing to himself. Nobody getting caught is also a sign that noone is doing it, which is far more likely if you think about the logistical difficulties of laundering money through a computer game rather than simply using more conventional methods.

Anonymous said...

[qquote]Anonymous said...
"No one said it's untracable. I said not criminal. It's like designer drugs: since the formula is not forbidden, you can't get into trouble selling it."
It's nothing like that, since it is actually illegal to provide funding to terrorists or sell illegal drugs. What you're saying is that because one step in the middle of that isn't illegal that stops the police being able to do anything, which is madness.[/quote]

Well, I'm no expert on any countries drug laws, but I think Gevlon's point was that any newly invented drug is no "illegal" drug by definition because no lawmaking body has banned it (yet). So it might be perfectly legal (not ethical) to sell these.

If one or several events in a chain are perfectly legal, the people responsible for this event will not be prosecuted. This is not madness but completely logical.