May 25, 2024
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This article has been written by Ms. Unnati Nigam (a final-year law student, currently pursuing her BBA LLB (Hons.) with a specialization in Corporate Law, from the School of Law, UPES.)


There has been a lot of talk about metaverses in the science fiction community as well as the gaming community; nevertheless, the number of legal academic works that have been particularly devoted to the metaverse has been rather low[1]. For instance, it was stated as recently as May 2021 that attention from legal practitioners is still in its infancy with regard to the metaverse. Instead, one has to take into consideration the notion of ‘virtual worlds,’ which is a topic that has been the subject of a great number of studies, in order to extend some of these concepts to possible legal difficulties in the metaverse. The metaverse is a groundbreaking innovation that has the potential to transform the ways in which we work, study, and interact with one another in a digital environment[2].

With the development of science and technology, crime in the country is increasing at an alarming rate. India’s laws have always been redundant, and constitutional amendments must be debated in Parliament before being approved. Also, data protection laws have not been advanced and made stringent enough to an extent that they answer the questions in accordance with the crime. The metaverse, a new platform based on Second Life[3], is based on the social life of today’s world, where Generation Z is not distinguished in both online and offline modes. The term “metaverse” was coined in 1992 by an author named Neal Stephenson to describe a computer-generated 3D universal world that can be viewed through goggles. The word “metaverse” is the combination of the prefix “meta,” implying transcendence, and the word “universe.” The metaverse[4] is a new development that has provided a direction for new businesses and acted as a new host for the social and economic sectors. But a few critical aspects have been left undiscovered[5], and the impact of such activities on a user’s life is also a question yet to be answered. The article focuses on giving a multidisciplinary approach to various legal issues and identifying crimes pertaining to security and privacy issues, etc., and in the world of the metaverse.


The following are the crimes that are discovered in the world of metaverse till now:-

Protection of avatars in the metaverse:

“Avatar” refers to a user’s virtual self-representation. People may converse and behave in ways that would not be conceivable in the offline world thanks to avatars, which enable people to differentiate between who they actually are and how they would never behave in real life[6]. The empowerment of the real-life individual and the avatar’s purported anonymity in the metaverse might lead to the arbitrary use of power to further one’s own interests to the detriment of the community as a whole[7]. One must first comprehend what it takes to be recognized as a natural person before deciding whether or not to offer an avatar the rights that a human being holds. It becomes important to investigate what the conditions of consciousness are if “awareness” is what distinguishes a real human from everything else (including robots, computer simulations, virtual games, etc.). An incredibly painful occurrence in the husband’s life led to the wife in BOM v. BOK[8], a Singapore court case, trying to strip him of almost all his assets by convincing him to sign a deed of trust, handing virtually all of his assets away and leaving him penniless. Unconscionability and undue influence were taken into consideration as vitiating variables that might impair one’s conscience.

Theft of virtual property:

Virtual worlds, like Roblox and Second Life, provide a two-way exchange of real money and their virtual currencies. With virtual currencies created by converting real money, users can purchase virtual goods and services. The virtual currency that users who sold these acquired can subsequently be converted into actual currency. Real money has been used as justification for the theft of virtual goods. Many nations, including Japan, South Korea, the Netherlands, and the United Kingdom, have taken legal action against the theft of virtual property. The digital asset that was taken may have been sold for its “actual” monetary worth if it was later converted to real money (for example, through an auction). If not, it appears to be very difficult to say if anything has “actual” monetary worth. This is covered in “Fantasy Crimes.”

Identity Theft:

In the metaverse, one’s identity has an even greater degree of significance. For instance, if someone takes over your account, they can start impersonating you by using your image and acting as if they are you[9]. In essence, not only would this be a danger to one’s reputation, but it might also place the real-world individual in legal jeopardy. An increasing feeling of impunity among bad actors, who believe they can utilise the anonymity given by the metaverse to get away with anything, is one factor that contributes to the proliferation of such issues. A possible answer to the problem of how to hold an avatar accountable for their acts in the metaverse is to have the avatar go through the process of registering, often known as incorporation.

There are several possible answers to this problem, some of which do not entail the procedure of incorporation or the raising of the veil. MMORPGs contain terms of service that attempt to restrict user behaviour in a contractual manner. These terms of service provide for consequences for violations, such as banning users from the platform and seizing their in-game assets. The confiscation of in-world assets may have severe consequences due to the fact that these in-world assets may be exchanged with other players or that players may be able to sell these assets for real money. Users of Fortnite and Roblox, for instance, are required to read and agree to the terms of service before being allowed to access the respective virtual worlds[10].

Money laundering through the metaverse:

In 2021, it is predicted that 8.6 billion dollars’ worth of cryptocurrencies will have been laundered. This is an increase of 30% from last year’s figures. Due to the anonymity it offers, a decentralized economy might continue this trend as it becomes more widely available. Recently, some nations have made an effort to include NFTs in their anti-money laundering regulations. B2C2 Ltd v. Quoine Pte Ltd[11] was a dispute involving the algorithmic trading of cryptocurrency that exposed the substantial monetary losses an end-user of the software could incur if the software malfunctioned, given that real money was involved in these transactions[12]. The court in Singapore ruled that it could examine the mental state of a human actor, specifically the programmer’s knowledge of the software[13]. This meant that the trading software program was declared incapable of displaying its own intelligence. The algorithmic trading software executed transactions precisely as programmed. The trading software would have been able to ‘learn’ how to trade if it utilized machine learning. Over time, it may develop a trading algorithm that was not envisioned by the original programmer. As there would be no pertinent human actor’s mindset to consider, attributing liability to the original programmer would be both unforeseen and unjust[14].

Tax violations in the metaverse:

Tax fraud and tax evasion are two common criminal tax offenses. Tax evasion implies that taxes are being paid in the first place. Due to different definitions of cryptocurrencies and NFTs, there is little agreement on when cryptocurrency and NFT transactions should be taxed, with some nations (such as China) outright banning cryptocurrencies while others (such as India) are debating the issue while others (such as Singapore) have relatively tax laws or impose capital gains tax with varying degrees of strictness.


Fantasy crimes[15] are deeds that, if committed in the real world, would be punishable by law but, in the virtual world, are often not. We consider them possibly the most significant ones.


In order to safeguard the user or stop money laundering, laws have made gambling with virtual currencies that may be purchased with real money or exchanged for it illegally. We take gambling with virtual currency that was not purchased with real money into consideration when discussing fantasy crimes. Generally speaking, it is not prohibited by law. Although the user cannot lose real money playing, addiction may prevent them from being productive or leading a healthy lifestyle. Online gambling is seen differently in many parts of the world. A decision needs to be made about the criminalization of gambling as a fictional crime.

It was decided in the case of Lee v. Lee’s Air Farming Ltd.[16] that there should be a difference made between actions carried out in one’s individual capacity and those carried out in one’s role as an organisation.


While prostitution is prohibited to varying degrees in many countries in real life, it is permitted in Second Life. Because virtual prostitution occurs between two individuals engaged in prostitution. While prostitution is prohibited to varying degrees in many countries in real life, it is permitted in Second Life. Due to the fact that virtual prostitution takes place between two adult-looking virtual entities, the site has not yet decided to outlaw it (in contrast to sexual age play). Users of Second Life participate in prostitution to either fulfill their fantasies or earn virtual money that can be exchanged for real money.


Because virtual weddings have no legal standing, players in monogamist nations can currently be married to many partners at once regardless of whether they are already married in real life. Virtual weddings could have just as many ethical and monetary repercussions as actual marriages if the metaverse takes over our lives and the economy.

Virtual murder and physical assault:

Because an avatar is virtual, actions that might physically injure a person in real life would not have any lasting effects unless they had been designed to do so. An avatar, on the other hand, can only be harmed through computer-related means, which, depending on the avatar’s real-world worth, may be classified as a cybercrime or property theft as a fantasy crime. Acts that would physically damage somebody in real life are taken into consideration. They are often user-activated elements in already-existing virtual worlds or are only accessible in locales that users choose to visit (such as Second Life locales and Roblox fight games).

Virtual rape and other non-consensual activities:

Both traditional and modern virtual worlds have seen the commission of such crimes (e.g. Second Life, Roblox, and Horizon Worlds). These behaviors typically involve touching another user’s avatar in a suggestive manner, engaging in sexual activity with another user’s avatar while making suggestive comments, and occasionally hacking the platform[17] to force human-controlled characters to engage in sexual activity with one another. Victims experience various levels of mental suffering, with some feeling traumatized and others feeling alienated.

Sexual age play and child pornography:

A user can alter the appearance of their avatar in certain virtual environments so that it differs from what people of their age typically look like. Virtual child pornography—completely computer-generated, sexually explicit images of children—has become a topic of controversy as a result. A noteworthy instance of sexual age play among adult users was found in Second Life’s Wonderland (i.e., having sex with avatars that resembled minors, which is now forbidden in Second Life).

Holocaust simulations and other delicate historical events:

In many European nations, this would be against the law, but not in the United States. We need to consider whether non-educational simulations of important historical events (such as genocides, assassinations, and terrorist activities) should be permitted generally for nations to come to an agreement.


 Laws mold society. They eventually serve as the foundation for ethical conduct, moral reasoning, and social standards. When developing a legal framework, we should think about how it will apply in the future, when the metaverse has supplanted our existing reality. The lack of empirical data may make this challenging. Fortunately, we can get a rough sense from previous and present circumstances in real-world virtual environments, psychological theories, and the justification for current regulations.

The legal status of avatars, which humans and presumably AIs utilize to engage with the metaverse, as well as the connection between governance and identity, are defined in this article. It also provides an outline of potential offenses and describes the difficulties in enforcing the law. Countries would need to agree on the rights and obligations of the many parties involved in order to maintain harmony in a world without physical boundaries, such as the metaverse.

[1] Jeena Greene, “Reed Smith boldly goes where no law firm has gone before—the metaverse” (21 May 2021) Reuters <> (accessed 4 October 2021).

[2] Ryan Faughnder, “Former Disney chair Bob Iger invests in metaverse company Genies” (14 March 2022) Los Angeles Times <> (accessed 26 March 2022).

[3] B. S. Bakioglu, “Spectacular interventions of Second Life: Goon culture, griefing, and disruption in virtual spaces,” Journal for Virtual Worlds Research, vol. 1, no. 3, 2009.

[4] Matthew Sparkes, “What is a metaverse” (2021) 251 New Scientist, 3348, p 18.

[5] B. Falchuk, S. Loeb, and R. Neff, “The social metaverse: Battle for privacy,” IEEE Technology and Society Magazine, vol. 37, no. 2, pp. 52–61, 2018.

[6] For instance, the section 19(5) of the Singapore Companies Act (Cap 50, 2006 Rev Ed) recognises the incorporated company as a ‘body corporate’.

[7] Perry Parks et al., “Don’t Hurt my Avatar: The Use and Potential of Digital Self-Representation in Risk Communication” (2014) 4(2) International Journal of Robots, Education and Art 10–20.

[8] BOM v BOK and another appeal [2019] 1 SLR 349 at [102]–[155].

[9] Akram Atallah, “What Does the Metaverse Mean for Your Digital Identity” (18 January 2022) Forbes <> (accessed 26 March 2022).

[10] Tom K Ara, Mark F Radcliffe, Michael Fluhr and Katherine Imp, “Exploring the metaverse: What laws will apply?” (22 February 2022) DLA Piper <> (accessed 26 March 2022).

[11] B2C2 Ltd v Quoine Pte Ltd [2019] 4 SLR 17, on appeal Quoine Pte Ltd v B2C2 Ltd [2020] 2 SLR 20.

[12] See Alexander Loke, “Mistakes in Algorithmic Trading of Cryptocurrencies” (2020) 83 The Modern Law 1343–1353.

[13] Supra, note 6.

[14] Mark Coeckelbergh, “Artificial Intelligence, Responsibility Attribution, and a Relational Justification of Explainability” (2020) 26 Science and Engineering Ethics 2051–2068.

[15] Susan Brenner, “Fantasy Crime: The Role of Criminal Law in Virtual Worlds” (2008) 11(1) Vanderbilt Journal of Entertainment and Technology Law 1, 2–3.

[16] Lee v Lee’s Air Farming Ltd [1961] AC 12.

[17] Rachel Stonehouse, “Roblox: I thought he was playing an innocent game” (30 May 2019) BBC News <> (accessed 5 October 2021).

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