Microsoft has denied reports that the NSA has been using surveillance technology to monitor the data of Xbox Live users. There has been rumors that both the US and UK governments have been using spying agencies to detect terrorism; allegations which the Xbox Live creator say are untrue.

When faced with these questions, a Microsoft spokesperson announced that the company was not aware of these claims and if they were true it was certainly done without their consent. The purpose of the rumored surveillance is to uncover terrorist activities in games and virtual environments. Furthermore it is claimed that spies had been looking through the personal details and chat logs of Xbox Live users.

Reports have even gone as far as suggesting that real life agents would be deployed virtually into games which are under the exploitation of illegal activity. It was alleged last week that World of Warcraft was infiltrated, Blizzard released the same statement that Microsoft recently has.

You can read about this potential scandal in more depth by checking out CVG, in the meantime it seems as though we need to wait for further developments on this story. Have you experienced any strange or suspicious activity on Xbox Live recently?