The short version: Jaycool and Ph0x were able to gain access to the administrative workings of the Vivox voice service. This enables them to listen to any conversation, anywhere on the grid, INCLUDING private estates such as Linden owned sims.
Additionally, using a "rogue sim" exploit, the two criminals were able to gain access to any user's computer, and download any file they wished.
Here's a short snippet of skype chat, where Hazim Gazov explains the rogue sim exploit in a little more detail. Some names have been changed.
Plastic Duck: to download files from peoples computers heh
[8:51:20 AM] hazim: yeah
[8:51:27 AM] hazim: the rogue sim thing + requestxfer
[8:51:34 AM] hazim: anything on the computer
? The Alphaville Herald
-- end quoted
Beside usual drama would have with voice on sim, this is reason enough to never use it, to NEVER use emerald and to clean from your computer NOW if foolish enough to continue using. Maybe you not have dime and not matter but if you have money and bank account linked to it is foolish to trust script kiddies. I not want see you wake up one day to find someone overnight raided banks around the world. That is kind of news you not want to be part of.