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In June 2009, China banned the "gold farming" practice.
Saw this article a while back: http://www.informationweek.com/news/internet/ebusiness/218101859
"In addition to its ongoing crackdown on Internet porn, the Chinese government has declared that virtual currency cannot be traded for real goods or services..."
It's worth noting, though, the in-game items like armor and weapons are not considered currency, and therefore are not covered by the ban. So, my question is, what's stopping people from farming the gold, buying a shiny new breastplate, and selling it off to the highest bidder for real-world cash?