Slashdot Mirror
EVE Online Rocked by 700 Billon ISK Scam
Martin Spamer writes "The space MMOG EVE Online, where mining rock plays a big part of the economy, has recently been hit by a huge in-game scam. The aftermath of the EIB scam... was 700 Billion ISK, which might raise some $119,000 USD if sold on Ebay. (The current conversion rate is 100M ISK to 18 USD.) These events have prompted claims of player deaths, death threats, and speculation about What Would You Do With 700 Billion ISK?"
Can someone explain the scam? The forum link has very little information and presumes the reader has background...
There's like 30 forum posts I can find googling about the EIB scam. but I can't find anyone talking about what it is. Just some dude named Cally screwed a lot of people, and apparently it was legit because of voting or something?
All I have to say is kudos for getting this story on slashdot since I don't even believe we can call it news. Let's try to at least explain the random stuff we are putting together, or at least keep the topics on stuff a little more mainstream then Eve if we don't want to spend the time actually putting an explination of the facts together.
Details can be found here and here Scammer used basic Ponzi scheme - set up a bank that gave interest on investments. Used new investments to pay off interest. Eventually, like all pyrmid schemes, it run out of investors so scammer cashed out and made "I won Eve" video. This worked since there are quite a few legitimate buisness in EVE, mostly pawnshops for T2 BPO's, that give good returns.
The 'Eve Interstellar Bank' was essentially a pyramid scheme masquerading as an in-game Investment Bank. It payed a dividend that steadily rose from around 9% a month to 16% to build confidence then when the investments stopped coming in closed shop.
It's interesting to watch all the scams that go on in Eve, I consider it a great social experiment.
There are three main features of Eve that create this situation.
1. Easy-to-use player run capitalist system. (It's easy for anyone to start up and manage a business)
2. Zero laws against corporate fraud (As pure as capitalism gets)
3. Anonymity from victims. (It's a lot easier to rationalize ripping off people in a virtual world.)
Combined together these factors have lead to some amazing corporate frauds and espionage.
I don't have time/effort myself to invest in Eve, but it's still fun to read what determined Eve players go to lengths to achieve.
(A thought occured to me while typing this. Someone should offer some sort of contract in Eve. Either it can be done through CCP with GMs backing it and they could even charge for it, or a sufficiently large and militarized corporation could sell contract enforcement. Maybe this has already been done, otherwise feel free to steal this idea and try to make some isk with it.)
If this signature is witty enough, maybe somebody will like me.
...the scam was your basic Ponzi scheme.
Get investors to your "bank" and pay them a high rate of return on their investments.
Use your "success" to get bigger investors. Use their capital to pay out your early investors.
Get more even bigger investors. Use their capital to pay out most of your investors.
As soon as you think you can't widen the parymid, close up shop and keep all of the investors money.
http://en.wikipedia.org/wiki/Ponzi_scheme
One of the interesting aspects is that the person who pulled the scam said so, publicly. And said who his main character is. One of the flaws in the game is that in theory, he could have transferred this money to another character he owned and been utterly untracable. But he came out and said 'I did it, these were the handful of characters I used, this is my main who I always play with'.
More interesting, he's set a bounty on himself of 1.2 bil and gone out looking for fights. (You collect the bounty if you blow up his ship, then catch his pod and blow that up too. A little tricky, but not impossible.) With 700bil in the bank, he can afford pimpin' ships and the best gear, and not worry about when he loses them. He's already been found and podded once (by some members of the Mercenary Coalition, if anyone's curious), not sure if he's going to keep bountying himself. Given his attitude, I suspect he will, since he's looking for a fight and pvp experience.
But it's basically 'yay i win eve'.
Gonzo Granzeau
"Nothing the god of biomechanics wouldn't let you into heaven for.." -Roy Batty
I play eve.
Phase 1: Cally opens up EIB and does an IPO on it. Many people get excited, lots of people invest, lots more people begin to store saving there.
Phase 2: Cally builds reputation and Bank starts to seem like one of the cornerstones of Eve's burgeoning investment market. To this day it's not clear how much of that was legitimate and how much was pyramid goodness.
Phase 3: A character named Currin Trading runs a scam and makes off with 30 billion ISK (the largest scam ever at the time)
Phase 4: Word gets out that Currin Trading was a scam, Currin Trading posts a very long explanation of the whole scam and ends it with another shocking revelation: EIB is also a scam! He recognizes all the signs because it's so much like his own scam.
Phase 5: Forum drama.
Phase 6: Insane forum drama.
Phase 7: Cally's faked a) hospitalization, b) incarceration c) death in very short sequence.
Phase 8: EIB is revelaed to be a scam, Dentara Rast is revelaed to be Cally's main (players can have up to three character per account) much gloating occurs. He puts a billion ISK bounty on his own head and goes out to fly PVP with the most expensive ships and equipment he can find (in Eve, if your ship blows up you lose it entirely).
Phase 9: Slashdot!
It should be noted that scams are an accepted part of the Eve game mechanics. Eve is ruthelessly PvP in combat and in the marketplace. It seems as though this was an entirely legitimate (in an EULA sense of the word) scam and that Dentara Rast will get off free and clear.
I have a lot of opinions about Cyborgs and Architects
What Would You Do With 700 Billion ISK? Two chicks at the same time. Darn straight. Two chicks at the same time.
Two chicks at the same time.
(sorry)
"BPO is a monopoly on an in-game item. (Well, there's 12-20 BluePrint Originals for each rare item). You normally win them in the in-game lottery, and it's the gift that keeps on giving. For WoW players, it'd be like purples not dropping and only being available from 1 player crafter per shard."
Not quite. To clarify to others: BPO means "Blueprint Original". To produce any item in EVE, you need a blueprint and raw materials. Originals may be used for production, may be researched to reduce material costs and production time to a certain degree (the limit being the maximum reprocessing value of that item. i.e. if a maxed out refiner reprocesses an item that was produced with no material wastage due to good research and producer skills, no materials are lost.) Last, BPOs can be copied.
Note that copies cannot be researched, cannot be copied again, and are limited to a certain number of production runs before they go poof. At one point copies could be used for unlimited production, and this killed the economy for at least a year and a half. While CCP made all new copies limited-run within a matter of a few months, the unlims were left ingame for at least another year before they were all converted to maximum-run-count copies.
In the game, there are currently three main classes of items:
Tech 1 - The baseline. The Tech 1 (referred to usually as T1) variant of any item is typically the worst variant (except for some items which have "Civilian or Basic" variants) T1 BPOs are one of the few things that can be bought off of the NPC market. There is an effectively infinite supply, so any player with enough money to invest in a T1 BPO can start producing it. For a while there was almost no money to be made in T1 unless you were first on the market (see the above comment about unlimited copies, from here on referred to as BPCs) Now that all BPCs are limited-run, there is now money to be made from T1 items, although not huge amounts.
Named items - All better than T1 variants, with increased effectiveness and reduced fitting requirements. They are NPC drops only, and no BPOs exist. Occasionally BPCs for these may be given out in various manners.
Tech 2 (T2) - T2 items have improved effectiveness at the cost of increased fitting requirements. (The exception being ships - they are just plain Better, and also are designed for specialization.) Some named items are better than T2 variants, although this is rare. T2 items can only be produced from BPOs that are essentially given out in a lottery, where lottery "tickets" are purchased by running missions for special NPCs in the game to gain what are called research points. There are only approximately 20 BPOs for any given T2 item in existence in the game. Additional BPOs are only given out if a BPO owner gets banned or CCP finds that they have gone inactive or have left the game. (i.e. the BPO isn't being used.) Due to the limited supply, T2 BPOs mean massive profits even though the material costs can be quite high. The thread linked to is talking about potentially buying out all (or most) BPOs of a given item, establishing a full monopoly on that item. You may see references in the thread to HACs - That stands for Heavy Assault Cruiser, and that particular type of ship is increasing in popularity but supply is not changing, so HACs are climbing steadily in price (and profit for the BPO owners).
retrorocket.o not found, launch anyway?
This occurs regularly in Eve, this just happens to be the latest incarnation (the title of "rocks" is way overblown, 99.9% of players in Eve won't even know or care). The basic "problem" in Eve is that there are no enforced laws on corporate behavior. No SEC or FTC. Therefore, it's almost a certainty that any venture that requires joint ownership and capital will ultimately end up in fraud. It's a great study for both libertarian and regulatory economists alike. Although some people may relish the prospect of no government regulation, the problem is that no grand projects of joint capital are possible (they do happen, but they are always under a cloud of suspicion and will ultimately fall to greed in most cases). This means there are no truly reliable avenues of investment (there is also no FDIC for joint ventures). For those who are going to point out that you can buy shares in X venture currently in game, wait awhile.
Also, imagine the work it takes for one person to run a scheme of this size, dealing constantly with investments, withdrawals, and dividends. Sure, it racks up a lot of cash, but the perpetrator probably had to "play" 23/7 for six months to pull it off, constantly dealing with minutiae. So, yes, well done in terms of a scam, but it takes a hell of a lot of work. Is 700 billion units of virtual cash worth it? Maybe, when you consider how much it could be transferred into real currency if he bought time cards with ISK and sold them.
However, here another economic curiosity comes into play - the number of people selling time cards is a limited number (you cannot buy time cards from CCP with ISK, someone has to pay CCP real money and then put them up for sale in ISK). Cashing out would spike the sell price of time cards in *ISK* through the roof. He would have to deal both the minutiae of buying and with selling hundreds if not thousands of time cards, which would also drive the cost of time cards down *in real currency*.
Basically, when you figure it all out and divide the final take in real currency by time spent to do the scam and then transfer it all, I doubt the hourly pay is impressive. So, sorry folks, no get rich quick scheme here.
The thing that worries me is games that are set up such that whoever invests the most time in it is the most powerful (Ok, this isn't too bad in itself, and is sort of natural, but it guarentees that the crazy people with no life are the strongest in the game), and has little to no consequences for PK.
If you're playing the game, you're playing a fantasy. Eventually one of the stronger players will find you at just the right moment and wipe you out. Everyone who isn't the strongest is just bait. At some point the hundreds of hours you've invested in the game are going to be flushed away by one guy who just loves being an asshole, and there's nothing you can do about it.
On the other hand, that would create a good in-game limitation against getting too addicted. Nothing breaks the addiction like being dumped back on square 1. Heck, even if you are the strongest with the biggest guild, there's always the chance that a bunch of other guilds will band together and take you down, or they'll send in spies to destroy you from the inside. A wild west atmosphere means occasionally getting shot and dying.
I read the internet for the articles.