The world's first "data haven" for storing electronic files outside the jurisdiction of UK laws may be on the verge of collapse, according to a former employee.

HavenCo hit the headlines three years ago, offering server space on Sealand, a World War 2 platform located off the English coast.

HavenCo generated interest at a time when the media's "Big Brother" headlines of the day focused on the UK's controversial Regulation of Investigatory Powers Act – or RIPA – of 2000.

In June of that year, the Anguilla-registered company struck a deal with the British owners of the so-called Principality of Sealand, a former World War 2 fortress six miles off the Suffolk coast that had claimed independence from the UK since the late 1960s (a claim that UK authorities have neither endorsed nor formally challenged).

The US directors of HavenCo promised freedom for those wanting to evade RIPA's monitoring and interception powers or the inconveniences of Britain's strict data protection regime – tempting, perhaps, to anyone with something to hide.

However, addressing a hacker conference in Las Vegas at the weekend, HavenCo's co-founder and Chief Technology Officer Ryan Lackey is reported by Online Casino News as saying:

"My business partners had become nervous about hosting objectionable material and were leading the company toward financial ruin, with only about six customers remaining.

"The key lesson on this is if you're going to put a co-location or virtual site-hosting facilities somewhere, political and contract stability in that jurisdiction is very important."

HavenCo denies Lackey's allegations. In an e-mail to CNet News a company representative said, "HavenCo is a viable operation. It is moving from strength to strength."

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.