Teen world Habbo hit by child sex scandal

Finnish virtual world Habbo is in hot water amid claims that it is not doing enough to protect its young users — accusations that have led one investor to pull its support for the company entirely.

The veteran social network, which has more than 9 million users — many of them young teens, faces a string of accusations in a British TV news investigation set to run on Tuesday night. They center on a large volume of sexually explicit messages found on the site, and focus on the apparent disinterest from Habbo’s parent company, Sulake, in vetting content and protecting young users.

The Kernel reported those claims, as well as the surprising news that the company’s second-largest investor, Balderton, was dropping its stake in the business:

According to Sulake, the site boasts 268 million registered users and 9 million unique visitors per month. It is available in 11 languages and claims customers in over 150 countries. Yet the company seems never to have addressed the material that floods its chatrooms and which, it is now alleged, is involved in the sexual grooming of children as young as 14.

Investors in Sulake now regard the company as sufficiently toxic to dump their shares. Balderton Capital, the second-largest shareholder in the company, is to return its 13 per cent stake at zero value and resign from the company’s board in an attempt to distance itself from the scandal.

Given the tricky nature of monitoring and filtering online content, Balderton has subsequently come in for criticism for abandoning one of its investments at a critical moment. But Techcrunch reports, that the investment group — which has previously backed services like Bebo with large teenage user bases — simply decided that a line had been crossed.

Paul LaFontaine, who took over as the CEO of Habbo’s owner, Sulake, last year, issued a statement on the situation, but also addressed the news in the comments on the Kernel article.

“I was incredibly concerned to see this report and to hear about the findings of the Channel Four News investigation,” he wrote. “As a parent, I understand the critical importance of making sure teenagers and young people have a safe online experience. I was sorry to hear of Balderton’s decision to withdraw its involvement, but my priority right now is to address the issues raised by the investigation. Since hearing about the report I have asked my team to tighten security across the site and to strengthen the user rules.”

He added that the company was “working to deliver improved safety levels”. No doubt more detail will appear later on Tuesday, after the TV investigation becomes public.