This is the second Riddler hostage after answering the riddle "what has a tail, one head, but no legs". The answer being "penny". Each Hostage is given after achieving 40 Riddler challenges. Challenges include locating Riddler trophies/detective riddles/destroying balloons, cameras & joker teeth. Hostage #1 is located in the courthouse where the game started began, all you have to do is beat up guards in the room where the game began with 2-face & Cat-woman.
hostage 1 = 40 riddles
hostage 2 = 80 riddles
hostage 3 = 160 riddles
hostage 4 = 240 riddles
hostage 5 = 320 riddles
hostage 6 = 400 riddles