Paul LaFontaine, CEO at Habbo studio Sulake, has been forced to defend the children's gaming and chat website, after an investigation by UK broadcaster Channel 4 which has uncovered alleged lapses in moderation.
Habbo, previously known as Habbo Hotel, first launched in 2000 and touts itself as a hangout for teenagers. The service currently boasts over 268 million registered users in total and 10 million unique visitors every month.
Channel 4's latest report on the social website says that on fifty separate occasions, the reporter was quickly met with chat that was "very sexual, perverse, violent [and] pornographic" in nature, and not suitable for the audience it is aimed at.
The report claims that on numerous occasions, the reporter was asked by other Habbo users for Skype or MSN contact details. John Carr, a child safety expert, noted, "If I was a parent of an 11-year old girl on this site, I would want there to be a moral panic. This should not be happening. What I've just seen makes me think this is a dangerous place for youngsters to be."
As a result of the expose, a spokesperson for Balderton Capital, who owns a 13 percent stake in Sulake, told Kernel Magazine that it will be returning its stake at zero value.
"We were given some information a week ago that profoundly shocked us," the statement read. "We had to ask ourselves whether we were comfortable being investors in a business where children were not being adequately protected."
"We didn't take this decision lightly, as we have been investors in Sulake for over 8 years, but the standards required to run a website that children have access to are very high. We felt the company was not meeting those standards."
"Any online community that allows users to assume virtual identities may be open to abuses, which is why we work hard to keep users safe, filtering content and blocking inappropriate users," he said. "We also provide education and rapid-response support to users who experience uncomfortable conversations."
He continued, "Habbo's moderation and safeguarding procedures includes employing more than 225 moderators, tracking some 70 million lines of conversation globally every day on a 24/7 basis. These moderators cover all time-zones and the multiple languages in which Habbo users converse."