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Bitcoin mining dispute ends with $1M settlement

After being accused of infecting computers with malware to mine Bitcoins, E-Sports Entertainment agrees to settle with US regulators.


A company accused of submitting its unaware customers to a Bitcoin mining army has settled with a 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 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 users' computers through software that was 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, US 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 mine for bitcoins illegally, took control of 14,000 computers in New Jersey and across the nation in only two weeks. It further generated approximately $3,500 in the virtual currency. Prosecutors said the malware could detect computer mouse movement and would mine Bitcoins only when users were away from their computers.

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."

In addition to paying $1 million to settle the complaint, E-Sport Entertainment also has agreed to stop deploying software code that downloads to consumers' computers without their knowledge and authorization, according to the New Jersey Attorney General's Office. Moreover, the company will submit itself to a 10-year compliance program and create a dedicated page on the Internet that explains what type of data it collects, the manner in which 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 10 years.

This story originally appeared as "Video game firm settles Bitcoin mining dispute for $1 million" on ZDNet.