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E-Sports Entertainment settles NJ user spying, Bitcoin mining complaint for $1M (update)

Samit Sarkar (he/him) is Polygon’s deputy managing editor. He has more than 15 years of experience covering video games, movies, television, and technology.

Competitive gaming organization E-Sports Entertainment has agreed to a $1 million settlement in a consumer protection complaint filed by the state of New Jersey, announced the office of the state's attorney general today.

The complaint alleges that E-Sports Entertainment, which is based in Commack, N.Y., used malicious code embedded in its anti-cheat software to illegally monitor users' computers and to hijack the computers to mine for Bitcoins.

According to the complaint, which you can read in full here, E-Sports Entertainment developers created the code and ran it from mid-April 2013 to the end of the month. During that two-week period, the company used the software to take control of the computers of approximately 14,000 E-Sports Entertainment users to form a botnet. Using that network of computers, E-Sports Entertainment allegedly mined for Bitcoins to the tune of about $3,500.

The complaint also alleges that starting in early April, E-Sports Entertainment deployed code that let the company access and monitor users' machines, even when the anti-cheat software wasn't running. The code allegedly gave E-Sports Entertainment "full administrative access" to the computers, allowing the company to capture screenshots, track mouse movements and monitor other activities even when users weren't logged into E-Sports Entertainment servers.

The code allegedly gave E-Sports Entertainment "full administrative access" to users' computers

"Consumers who subscribed to E-Sports' video game anti-cheat services paid for protection from cheaters — not to be cheated by the very services they'd purchased," said Christopher S. Porrino, director of the Division of Law at the New Jersey Attorney General's office, in a press release today. E-Sports Entertainment charges a $6.95 monthly fee for its services.

Under the terms of the settlement, E-Sports Entertainment agrees not to put software on its users' computers without their consent, and will add a page to its website that's dedicated to laying out the specific data it collects, the ways in which it collects that data and how it uses the information. In addition, the company is submitting itself to biennial security and privacy audits from a third-party company through 2023.

E-Sports Entertainment will pay $350,000 of the $1 million settlement now to New Jersey, and if the company stays clean for the next 10 years, the remaining $650,000 of the fine will be vacated. The company is also the target of a similar lawsuit, a class-action complaint filed in San Francisco Superior Court this past July. Its co-owner admitted to the allegations and apologized in May.

We're reaching out to E-Sports Entertainment for more details, and will update this article with any information we receive.

Update: E-Sports Entertainment issued Polygon with the following response to the state of New Jersey's announcement earlier today:

As a result of the Bitcoin incident that occurred earlier this year, an investigation was opened by the Attorney General of New Jersey. We cooperated fully with the investigation and agreed to settle the matter so that we would be able to return our full attention to our business and serving the needs of the ESEA community.

We want to make it clear to our community that we do not agree with the Attorney General's account of the Bitcoin incident.

The settlement that was signed makes explicitly clear that we do not agree, nor do we admit, to any of the State of New Jersey's allegations. The press release issued by the Attorney General about our settlement represents a deep misunderstanding of the facts of the case, the nature of our business, and the technology in question.

Moving forward, it is our intent to provide our community with confidence that ESEA will be taking every possible step to protect your privacy. The employee who was responsible for the Bitcoin incident was terminated, and we are taking steps to ensure that nothing like this can happen again. In the weeks to come, you can expect to see a notice posted on our website that provides a detailed explanation of our privacy policy in a manner that can be easily understood. Additionally, regular audits will be conducted by a third party specialist in order to ensure that we maintain a secure environment and protect your privacy.

The ESEA Client remains to be a powerful tool that we will continue to offer our customers for a fair online video game experience. We remain committed to moving forward and focusing on delivering a high quality online video game experience for our customers.

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