State Settles Bitcoin Case vs. Online Gaming Company

An online video game company accused of infecting thousands of computers with malicious software and using that access to illegally mine for the electronic currency Bitcoin has agreed to pay a $1 million settlement, the New Jersey attorney general's office said Tuesday.

Acting Attorney General John J. Hoffman announced the settlement with E-Sports Entertainment, which bills itself as the "largest competitive video gaming community in North America," according to court documents.

The company charges users $6.95 a month to play popular games including Counter Strike and Team Fortress 2 alone or against one another on what they said is a platform that does not allow cheating.

In order to play, users must download E-Sports software onto their computers. When downloaded, the software has administrative access to the computer. It was through that software that two company employees, a co-founder and a software engineer, installed code allowing them to mine for Bitcoins without the users' knowledge, authorities said.

The Commack, New York -based company's co-founder, Eric Thunberg, and software engineer, Sean Hunczak, were involved in the settlement.

In a statement, Thunberg said the company cooperated fully with the investigation and that it will "take every possible step" to secure user privacy. It said the responsible employee had been fired. The company said it doesn't agree with the attorney general's account of the matter and the signed settlement makes it clear the company has not admitted to any wrongdoing.

Thunberg said a press release from the U. S. Attorney about the settlement "represents a deep misunderstanding of the facts of the case, the nature of our business and the technology in question."

Bitcoin is a cybercurrency that is relatively anonymous. They are created and exchanged independent of any government or bank. Some retailers allow the money to be used, and the currency can be converted into cash...

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