Bitcoin Scandal Shakes E-Sports League [UPDATE]

By Kamau High , Updated May 01, 2013 11:52 AM EDT

UPDATE: Craig Levine, co-found of ESEA, just put out another statement on the company's web site labeled, "Bitcoin fiasco." In it he admits the company was testing adding bit coin mining internally but the project was killed. It was then that a "an employee who was involved in the test has been using the test code for his own personal gain since April 13, 2013."

He goes on:

"What transpired the past two weeks is a case of an employee acting on his own and without authorization to access our community through our company’s resources. We are extremely disappointed and concerned by the unauthorized actions of this unauthorized individual. As of this morning, ESEA has made sure that all Bitcoin mining has stopped. ESEA is also in the process of taking all necessary steps internally to ensure that nothing like this ever happens again.

The owners and management at ESEA all apologize to each of you that were impacted by the recent events and intend to make things right. ESEA has issued a free month of ESEA Premium to all of our community members who were enrolled in Premium for the month of April. We also ask anyone who has experienced any physical damage to their computers to open an ESEA support ticket.

In an effort to maintain complete transparency, we have released all of the Bitcoin wallet addresses as well as data dumps of the wallets themselves. The value of the mined Bitcoins was $3,713.55 and ESEA will be donating 100% of the $3,713.55 to the American Cancer Society. ESEA will also match 100% of this amount for a total of $7,427.10 donated. ESEA is also increasing the Season 14 League prize pot by $3,713.55."

ESEA bills itself as the "largest competitive video gaming community in North America." The company puts on competitive tournaments for games such as Counter Strike, League of Legends and Team Fortress 2.

Yesterday reported that the ESEA client, which is neccessary to play in their tournaments, was secretely mining bitcoins, the digital currency that is difficult to trace. At first Eric Thunberg, chief of ESEA, claimed that the code was inserted as part of a joke. Thunberg wrote that only $280 had been mined. In a follow-up, he wrote that the actual amount was $3,602.21 and the mining had been going on since April 14.

Unsurpisingly, users were upset that their machines had been used without their permission. Today, Craig Levine, co-founder of ESEA, put out a statement saying he was "ashamed" of the whole affair. The company now says that the money will be put into tournament prize pools and the bit coin mining code has been removed. What will happen to the people responsible for putting the code into the client remains unclear. His statement, posted to the company's forum, is below:

"The first I learned about any of this was last night (on any scale). I had no idea any of this was going on.

Needless to say I am completely embarrassed, disgusted, and ashamed.

For the past ten years, I've tried to do nothing more than to act honestly and be an upstanding leader in the gaming community and with some bad decisions by some trusted people it has been thrown out the window.

I'm wrapping my mind around this whole thing and we'll release a formal response, but for the time being just know that this wasn't some ESEA / company wide scam.

I'm committed to doing whatever possible to rebuild the trust we lost through this whole fiasco.

It's a failure on my part to have the proper oversight to have prevented this from happening and it will be addressed.

My primary concern at this point is community trust and how that was destroyed. We need to understand the situation, take the appropriate action with those responsible for it, ensure we have things in place to prevent this from happening, and address anyone who incurred physical damages.

How we rebuild the trust of the community in the immediate aftermath and long term future is going to be a different discussion that we need to have as I walk through this all."

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