By JOHN MARKOFF
The New York Times
June 4, 2000
If the mouse roared in cyberspace, would anyone hear it?
In the annals of Internet history, June 5, 2000, may be remembered as the date that a hardy band of true believers tried to establish the first independent colony in cyberspace.
On Monday, a small international group of computer rebels plans to introduce what they are calling a data haven, perched precariously on a World War II military fortress six miles off England's coast.
They are hoping that the installation, connected to the Internet by high-speed microwave and satellite links, will become a refuge from governments increasingly trying to tame and regulate the Internet.
Their company, known as Havenco, has struck a financial arrangement with a self-proclaimed prince, Roy Bates, an eccentric retired British army major who in 1968 briefly gained notoriety when he landed at the abandoned fortress and declared it a sovereign nation -- the Principality of Sealand -- outside the reach of British law.
The Havenco founders are loosely associated with a movement of American computer mavens known as "cypherpunks," a largely libertarian group espousing the idea that advanced computer encryption technologies can create electronic privacy and provide liberty and freedom from potential government Big Brothers.
The company intends to offer its data haven to a diverse clientele that may wish to operate beyond the reach of large nations for reasons of privacy or financial necessity. They expect their customers to include people who wish to keep their e-mail safe from government subpoenas as well as other businesses seeking to avoid regulation, like international electronic commerce, banking and gambling.
"Technology has made it easier to move information and hide information," said Sean Hastings, a 32-year-old United States citizen who is the chief executive and co-founder of Havenco. "Soon it will be impossible to trace where money is and who has money, and that will eventually force governments to move away from income taxes and toward consumption taxes."
In its bid to offer both security and sovereignty, however, Havenco has a formidable task. Computer security experts generally say no networked computer systems can be proven to be perfectly secure -- and e-mail by its very nature is a two-way communication. Legal experts also said that while Britain might have done little to assert jurisdiction over the offshore enclave in the past, any prospect of its use for digital money laundering, gambling or tax evasion might quickly force the issue.
Several years ago, as a programmer for a similar effort to create an offshore data haven on the island of Anguilla in the British West Indies, Mr. Hastings sharpened his ideas on building computer systems that offered what he calls genuine privacy and security.
While there he designed an anonymous digital currency system intended to help create an efficient barter system in cyberspace safe from the world's taxation systems.
But the government of Anguilla was unwilling to give the assurances Mr. Hastings felt were necessary to set up a secure data haven.
And so last year he began his search for another sympathetic base of operations, turning to a book called "How to Start Your Own Country," from which he learned about Mr. Bates and his Principality of Sealand -- a former antiaircraft bunker sitting in 20 feet of water.
Decades ago, Mr. Bates used the abandoned concrete fortress, east of London, as a platform for what was called pirate radio, operating without license from the British government. He says he is struck by the parallels between pirate radio and the idea of a pirate Internet.
"We've had dozens and dozens of proposals and we've turned them all down," he said. "This is the first one that seemed to be really suited to what we are."
Sealand has had a variety of legal skirmishes with the British government since 1968, at one point even firing warning shots at a British naval vessel trying to reach the fortress. It has managed to maintain a semblance of legal independence, although the issue of sovereignty has never been formally tested, Mr. Bates acknowledged.
"I've never had to confront them directly," he said. "They've always ducked and dodged the question."
Mr. Hastings said he was in the final stages of raising million to start his company, which is incorporated in Anguilla. He said he believed that Sealand's sovereignty would stand up to a court challenge, but some American legal experts are skeptical.
"Offshore markets have become a focus of attention recently among the G-7," the conference of leading industrialized nations, said Michael D. Mann, a Washington lawyer who is the former director of international enforcement for the Securities and Exchange Commission. He said that the flaw in the Havenco plan was that cyberspace markets must still have points of contact with the world's conventional economies.
"You can have all the secrecy and protection in the world as long as you don't need to write a check or wire a dollar," he said.
The Havenco executives may find their haven illusory, said Mr. Mann, who was involved in a number of law enforcement actions with investors who tried to establish offshore havens while he was at the S.E.C.
"What's so ironic about the Internet is, as impersonal as it is, it creates the ultimate paper trail," he said.
That possibility has not deterred Mr. Hastings and his colleagues, who have moved three power generators to the offshore site. The group is now installing the finishing touches, including a special room housing hundreds of server computers, and expects to open for business within weeks.
To forestall some government alarm, Havenco has established an "acceptable use" policy banning its customers from using the service for sending the unsolicited bulk e-mail known as spam, mounting attacks on other computer systems or trafficking in child pornography.
Anything else, however, Mr. Hastings considers fair game, and he said his tiny cybernation had stockpiled a year's worth of food, fuel and other supplies in case of a blockade.
He said he was willing to take a political stand if necessary and acknowledged that he might become an exile from United States as a consequence. He said the company was already looking at several small nations that might shelter similar islands in cyberspace.
Mr. Bates, the 78-year-old ruler of Sealand, says he does not believe that his data haven deal will lead to a confrontation with the larger island nation next door.
"I wouldn't do anything to offend England," he said. "I'm an Englishman."
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