Mod chips have been one of the most popular things for console enthusiasts for a long time now. Often used to unlock a console to allow it to play copied (or “archived”) games, people selling modchips have come under scrutiny many times before, treading on a legal grey area. Recently, Sony has brought down a $9 Million lawsuit on a modchip retailer, the largest one to date.

The company in question, Divineo, is not based within the U.S. or Japan, so there isn't a lot of legal room for Sony. It is probably a scare tactic more than anything, to try and reduce the number of modders. It may also be a way for them to take some of the negative press off the PS3 and the battery recall. Either way, there hasn't been an official statement from Divineo yet.