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 Habbo  chat disabled as another investor pulls out
Habbo chat disabled as another investor pulls out
June 14, 2012 | By Mike Rose

June 14, 2012 | By Mike Rose
More: Social/Online, Business/Marketing

Amidst the ongoing fallout from a damning investigation by UK broadcaster Channel 4 about children's chat and gaming website Habbo, owner Sulake has been forced to disable all chat across the entire website as another major private equity group has ditched its shares.

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.

The Channel 4 report earlier this week alleged that a reporter was met with chat that was "very sexual, perverse, violent [and] pornographic" in nature, and not suitable for the audience it is aimed at.

As a result of the investigation, Balderton Capital, who owns a 13 percent stake in Sulake, said that it will be returning its stake in Sulake at zero value, while British retail giants Tesco and WH Smith have withdrawn the sale of gift cards for the website.

Now the 3i group, a private equity group which owns 16 percent of Sulake, has met with the board of Sulake, and decided to offload its shares in the company, according to the Guardian.

In the meantime, Sulake CEO Paul LaFontaine revealed that all user conversations across the entire Habbo website have been muted pending an internal investigation, potentially lasting "days and weeks."

"We are still reviewing our long-term plans for the Habbo community," he explained, "and would like to thank our millions of loyal users for their support at this challenging time. This decision has not been taken lightly and underlines the company’s continuing commitment to ensure that all our site users remain safeguarded from inappropriate behavior and conversations."

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Terry Matthes
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I'm kind of baffeled by what's going on here. I understand the plight of parents wanting to keep kids safe, but the "game" isn't designed for kids and this kind of thing happens on probably every single chat platform where adults and adolecents mix.

I remember getting harrassed in Lycos chat rooms back in the day. I just don't see why the hammer is coming down so hard all of the sudden. Ban/charge the bad apples and keep going. If everyone needed to sign up with a credit card for identification purposes I think this would stop a lot of harrasement

What that investigation found was a bad man, not a bad game.

Welcome to the internet.

Evan Van Zelfden
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This is unprecedented.

According to this article, 29% of the shareholders just abandoned their value. Reuters reports the valuation of the company at $300 million. That means the decision to walk away costs them $100 million — and for the other owners (which Reuters says include Finnish advertising agency Taivas and telecom operator Elisa, and Japan's Movida Group), they now get to keep an extra percentage of that pie. Overnight return-on-investment.

How often have we seen that with other companies in the game space, or, indeed, how often have we seen private-equity firms that want to walk away from an investment due to controversy?

Craig Timpany
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And of course all the remaining shareholders will be under pressure to abandon their shareholdings instead of selling them, lest they're accused of profiting off child abuse. It might be a moot point though: if retailers continue to refuse to stock their currency cards, there's not much of a business left.

Bernie M
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Haha, just checked out their site (I have never heard of it before, although I tend to avoid social network sites). Anyway generally I never trust sites with dark color background. I'm strengthened in my belief lol.

John Marc
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I've been messaging Paul Lafontaine about illegal casinos, operation of child sex rooms and other illegal activity since September 2011. Prior to that I was emailing Ex-CEO Timo Soininen. in 2006 Timo Soininen responded to one of my emails saying he would investigate the situation of child cyber sex. He ended up neglecting the children by doing nothing. He then ignored thousands of emails from hundreds of people up until 2011 when CEO - Paul Lafontaine took over this child brothel. After 6 years of witnessing some of the most disgusting behaviour I decided to start a twitter account called several months before this issue hit the news.I was so disgusted by what I seen i was ready to dedicate my entire life to raise awareness about Sickos like Paul Lafontaine who many believe organize teams of spammers to gather teens within the network he controls to develope child pornography. Paul Lafontaine has made it his personal battle to ban anyone bringing attention to the sick problems within his community. Imagine sending him am email and within hours being banned for reporting this issue that could have been clearly prevented if anyone within this heartly organization cared. The fact is the people who own Habbo have known about the issue and have done nothing about it. They have actually contributed to the issue by releasing furniture that resemble sex toys, included sex rooms under the staff pick list and banned players who questioned why rooms like "Sex club" is the highest rated room on habbo. All Habbo staff and management should have been arrested locked away for life for knowningly neglecting a serious issue like this. Justice will prevail and Paul Lafontain, Timo Soininen and the rest of the owners will be arrested without a doubt!