When the news broke out, everyone was in shock. It was an outrageous act of skullduggery. The CEO of a well known financial institution that has, over the years, established a record of impeccable credibility, tricked all his customers and made their entire investment go up in smoke. Billions gone down the drain.

Bernard Madoff, you think?

Think again. In fact, you need to think in galactic scale.

Eve Online is a parallel universe built by the gaming company CPP. They have entire cities, planets, solar systems and galaxies teaming with activity. As you’re sipping afternoon tea in your real office, battles between gigantic space armies take place in a far away corner of that virtual cosmos.

And now it seems that this virtual world is infested with fraud not unlike that in the real world.

The galactic space news agency – OK, actually it was Reuters – reported that the CEO of a bank in Eve Online has walked away with 200 billion of his customers’ game money.

Residents of Eve Online have known Ricdic – that was his nickname – for years. They trusted him with their investment, and he always paid a nice interest, just like Maddoff. But it was all a hoax. One day he just took out 200 billions from the balance his virtual bank managed, and sold it in the real-world black market for virtual goods and currencies.

200 billions! Read that, Madoff, and weep!

The culprit was identified by Reuters as Richard, a 27 year-old tech worker from Australia who experienced real-world debt. He sold his 200 billion of stolen game money for $6,300 of real money, which other players were eager to pay him.

Three days after the embezzlement word got out about the theft, causing a classic run on the bank as distressed customers attempted to salvage their virtual investments. The chairman of the bank, which has six executive directors on the board – Ricdic was only one of them – gave a fascinating interview to IGN magazine, explaining how the bank managed to survive nevertheless. The article is a good read for anyone interested in virtual economies.

According to the report, Ricdic was severely punished: he was removed from the Eve Online server, which practically amounts to a virtual death sentence. But Richard who scammed hundreds of fellow gamers did not break any real-world law. Eve Online is known as a brutal gaming environment where piracy, assassinations and high treason are common. So unlike Madoff who was sentenced to 150 years in prison, Richard will walk free. He told Reuters he was not proud of his deed, but that he would do it again if the circumstances were similar.

You might ask yourself why would gamers pay $6,300 of real money for 200 billion of virtual money. What can you do with 200 billion space credits?

Quite a lot, actually.

Virtual worlds such as Eve Online and World of Warcraft have an economy based on virtual currency. A Titan-class capital spaceship would take 60 billion interstellar kredits to build, and that’s before you equip it with any cool weaponry. An epic flying mount in World of Warcraft will cost you five thousand gold pieces – which you can only collect following hundreds of hours completing quests and slaying treasure hoarding beasts.

Time is money. If you want that purple ray phaser gun for your pirate spaceship, or that shimmering magical wand of destruction for your Elvish wizard, you need to spend a huge amount of game hours to amass the necessary currency. No wonder many gamers seek a shortcut.

The shortcut is a rapidly growing black market for virtual goods and game money. You pay another player in dollars and in return you get virtual gold or items sent to your game account. The official party line of the game developers running the virtual words is that trading in items or money is banned; but they have to keep a blind eye because the black player-to-player market answers a real need.

And so, players buy and sell virtual space credits and gold pieces, virtual characters and virtual weapons, in return for real money. And where there’s real money involved, there’s also fraud.

So, guys, what do you think? Did Richard commit a criminal offense, or just cheated in a virtual game? I'll be happy to get your thoughts.

Cheers!