Another investor pulls out of Habbo Hotel after grooming claims

Investors are pulling out of Finnish social networking firm Sulake and its teen-aimed website Habbo Hotel after revelations that Habbo was hosting illicit content.

Private equity firm 3i announced today that it had left Sulake's board and was ditching its 16 per cent stake in Habbo Hotel, a social gaming network and online community for teenagers.

"3i has actively supported the Sulake board in determining the right course of action in these very challenging circumstances," the firm said in an emailed statement.

"Following a board meeting today, we have resigned our board position and will cease to be a shareholder in the company."

3i's opt-out follows that of investor Balderton Capital, a London-based venture capital firm, which said on Tuesday that it was dumping its 13 per cent stake in Sulake after the news of pornographic chat on the site broke.

Channel 4 News reporters posing as children on the site claimed they were sent explicit messages and urged by other users to undress in front of web cams.

"We were saddened to hear of 3i's decision to leave the board of Sulake," a company spokesperson told The Register, "however our primary focus right now is on the safety of our community users."

Yesterday, Sulake CEO Paul LaFontaine said that the firm had decided to mute all conversation on the Habbo Hotel site while it investigated the allegations.

"This decision has not been taken lightly and underlines the company's continuing commitment to ensure that our site users remain safeguarded from inappropriate behaviour and conversations," he said in a post on Sulake's website.

A Sulake spokesperson said today that despite the muting, users were still on the Habbo Hotel site showing their support.

"Since conversations on the site were muted, thousands of loyal users have remained active on the site, holding a silent candle-lit vigil to demonstrate their support for Habbo," they said.

"We have launched an internal review of the site and we will inform our users of outcomes just as soon as we are able."

Sulake would not comment on how losing two sizeable investors would affect it financially.

Habbo Hotel is aimed at children over 13, who are invited to create their own avatars and build "rooms" in the hotel where they can play games and meet people.

Channel 4 News said its investigation had revealed children as young as nine using the site. It also discovered that paedophiles had used the site to groom young girls (full report from Channel 4 here).

Habbo has 268 million users in over 150 countries. ®