Video game firm settles Bitcoin mining dispute for $1 million

After being accused of infecting users' computers with malware to mine Bitcoins, E-Sports Entertainment has settled the claim with U.S. regulators for $1 million.

A company accused of turning its customers in to an unaware Bitcoin mining army has settled with New Jersey's attorney and will pay a settlement of $1 million.


Online video game company E-Sports Entertainment has been accused of infecting thousands of computers belonging to customers in order to illegally mine Bitcoins.

E-Sports was established in 2006 and charges subscribers $6.95 per month for its game subscription service. Malware was injected within user computers through software necessary to play games through the subscription service. Once downloaded and installed, the digital currency was mined without user consent.

Court documents state that malicious code was installed within the software by two employees, co-founder Eric Thunberg and engineer Sean Hunczak. In a press release, U.S. lawmakers said that thousands of computers were infected when users signed up for its anti-cheat online games service.

According to the complaint, the malware also allowed E-Sports to monitor computers even when users were not signed in to the Commack, N.Y. -based company's services. In addition, prosecutors estimate that the botnet which connected the computers and allowed them to illegally mine for bitcoins took control of 14,000 computers in New Jersey and across the nation in only two weeks, and generated approximately $3,500 in the virtual currency. Prosecutors said that computer resources were used to mine Bitcoins only when users were away from a computer -- detected by movements of a computer's mouse.

Acting Attorney General Hoffman said:

"This is an important settlement for New Jersey consumers. These defendants illegally hijacked thousands of people's personal computers without their knowledge or consent, and in doing so gained the ability to monitor their activities, mine for virtual currency that had real dollar value, and otherwise invade and damage their computers.

This case should serve as a message that we are committed to protecting New Jersey consumers, and that we will hold accountable anyone who seeks to exploit them through misleading claims, deceptive practices or the invasion of their computer privacy."

The New Jersey attorney general's office said that E-Sports Entertainment will pay $1 million to settle the complaint. The company has also agreed to stop deploying software code that downloads to consumers’ computers without their knowledge and authorization, will submit itself to a 10-year compliance program, and create a dedicated page on the Internet which explains what type of data it collected, the manner it is collected, and how it is used.

E-Sports Entertainment must pay $325,000 to the state immediately, and the rest is suspended for now. If the company behaves itself, then the rest of the fine will be written off after ten years.