E-Sports League Hit With Lawsuit Over Bitcoin-Mining Scandal [Update]

Three gamers have sued the ESEA League, one of the largest PC gaming leagues, for the surreptitious installation on their computers of malware that "mined" the virtual currency called bitcoins, netting a rogue ESEA employee some $3,700 back in April. Their lawsuit seeks class action status.

The suit was filed in San Francisco on Wednesday in California state court. The plaintiffs, Kevin Gallette, Jackson Smith and Roy Han, allege that the bitcoin-mining malware required so much of their computers' processing power that it damaged their video cards. Several allegations of GPU damage were made in the ESEA League's official forums as the scandal unfolded.

In a statement provided today to Kotaku, Craig Levine, a co-owner of E-Sports Entertainment Association, the league's parent company, said the league set up a claims process to reimburse anyone in the ESEA League community whose hardware was damaged by the malware. So far, this process has resolved about 270 claims without going to court; another 20 or so are left to be dealt with. Additionally, said Levine, ESEA League gave all members a free month of Premium service.

Bitcoins are a virtual currency that are "mined" by resolving a very complex cryptographic equation, taking large and prolonged amounts of processing. Compiling a large network of computers, either knowing or unknowing, to divide the workload is one way of doing that more efficiently. The concept is that a computer sitting idle gives its GPU over to the mining application.

In a statement on May 1, ESEA League's parent company, E-Sports Entertainment Association, admitted to the installation of bitcoin-mining code on users' computers through the ESEA League client that handles matchmaking and other functions. ESEA accused an unnamed employee of doing so for personal gain. ESEA donated all money made from the mining, plus a matching amount, to charity, increased prize pools, asked any users who suffered hardware damage to file a support ticket, and promised to sanction the employee responsible.

"The person responsible for releasing the unauthorized Bitcoin mining code has been terminated," Levine said in today's statement.

ESEA League has been in existence for about 10 years, supporting games such as Counter-Strike, Team Fortress 2, and League of Legends.

ESEA said the bitcoin-mining project began as an internal experiment to see how mining worked, and whether it could become a feature that added value. This was around the time bitcoins' exchange rate soared past $260 per 1. It's now around $70.

Management ordered the mining experiment scrapped, the ESEA said, but an unnamed employee still inserted the code into an update for the ESEA client that all users later downloaded. From about April 13 to the end of the month, $3,713.55 worth of bitcoins were mined by ESEA League users. ESEA said this employee did so without authorization and for personal gain.

Some users complained the malware fried their video cards, causing them to operate at extreme temperatures for prolonged times, resulting in video errors. Plaintiffs Gallette, Smith and Han all allege the same thing; Gallette and Smith say they paid $500 for their video cards; Han said he paid $70 for his. They paid about $300 each to replace them. Further, the three say their electricity bills jumped an extra $30 in the month their computers were running the bitcoin mining malware.

The three plaintiffs seek class action status for their complaint, the return, to users, of any funds made from bitcoin mining performed by their computers, compensatory damages for the cost of their ruined hardware and electric bills, legal fees and unspecified punitive damages.

Levine said ESEA could not comment directly on the lawsuit, but noted "We have been dealing with the entire situation in a responsible fashion to remedy those impacted and take steps to prevent this from happening again."

The case is Kevin Gallette et al. vs. E-Sports Entertainment, llc, number CGC-13-532593.

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