The first virtual currency crime: hacker jailed after $12m Zynga theft

Last week a hacker faced a substantial prison sentence after pleading guilty to stealing approxmately $12 million worth of Zynga chips, a virtual currency used in its poker game.  This is big stuff (more on that below).

I spoke with Develop about this fascinating development – here’s their article:

“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.

Mitchell was remanded in custody after the case was adjourned for reports.

Digital economy

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.

Hacker record


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.”

THOUGHTS:

As I said to the Develop guys, this case really does seem to break new legal ground.  For the first time (so far as I’m aware anyway) in the West, a court has looked at virtual currency and seemingly accepted on relatively little argument that it can be classified as ‘property’ within the meaning of (UK) criminal laws (though NB I can’t state definitively the the court found virtual goods = property, because we don’t have the court transcript).

So what?  Well, as longtime readers will know, I’ve been exploring for some time the legal status of virtual goods, which I think is going to come under significant pressure from different directions in the next few years.  The key issue is whether virtual goods are ‘goods’ (i.e. property) or whether they are services or something else.  If they are property, then in principle they could be bought/sold/assigned etc – which goes way beyond the way in which virtual goods are currently dealt with.

Until now, there has been relatively little by way of official analysis of this issue – which is why this case, where a judge seemed willing to convict a man based effectively upon theft of a virtual currency – is significant.

We may not hear much more about this particular development (except possibly when the man is actually sentenced) but this is definitely not the last we’ve heard about the interaction between games, virtual goods and the criminal law (in fact, I might even write a piece on that next month!)  As always, watch this space…

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21 comments

  1. Mitchell didn't learn the first time he was convicted. Big mistake doing it again. I believe a first offense – good lawyer which will cost a lot of money will keep you out of jail, BUT learn from it. Hacking no matter what you are doing with it is a crime punishable by law and been that way for a long time.

  2. Good for him!!! Hackers are a bunch of thieves that goes through the extreme over game. They just made an example outta this man.

  3. LOL, maybe I should go to work for Zynga and show them how to secure their shit. Hey Vic! Miss me yet?

    Saluti,

    The Godfather

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