Video game league apologizes for Bitcoin scandal

A competitive video game league with close to 500,000 members has apologized after admitting to harnessing users' computer power togenerate Bitcoins, an electronic currency that has soared in value in recent months, without their consent.

"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," the E-Sports Entertainment League wrote in a post on its website Wednesday.

The league bills itself as a way for users to play video games such as Counterstrike over the internet while ensuring that their opponents aren't cheating.

ESEA said it has made sure all Bitcoin "mining" has stopped and is offering a free month of its premium membership to users who had a membership in April. It added that anyone who experienced "physical damage to their computer" as a result of the Bitcoin mining should open an ESEA support ticket.

• All about Bitcoins

ESEA said it is donating all of the $3,713 worth of Bitcoins mined using users' computers to the American Cancer Society and matching that amount with a donation from its own funds.

Bitcoins are a virtualcurrency based on a set of rules and a particular way of encrypting data. They are generated through a process known as "mining," which requires a tremendous amount of computing power because it isdirectly linkedto the processes thattrack andmanage thecurrency and its transactions.

The value of Bitcoins has fluctuated wildly, but has increased dramatically overall since November 2011, whenBitcoins were worth just $2 each. They hit a peak of $266 this past April and as of Thursday, they were worth around $95. The soaring values have led to a number of recent reports of malware that harnesses the computing power of unwitting users to mine Bitcoins.

Antivirus warnings

ESEA users had recently begun complaining that the company's anti-cheating software was generating warnings from their antivirus software and was causing computer crashes and other problems. Then on Tuesday, one user, who said he or she had relatives in the software forensics industry, reported that his or her computer had been mining Bitcoins "for someone in the ESEA community," reported the technology news website Ars Technica.

After another user posted evidence that his or her computer was being exploited to mine Bitcoins, ESEA's co-founder and administrator Eric Thunberg, who goes by the online alias "Ipkane" provided details of what was happening in a posting on the ESEA website.

He said the Bitcoin mining software had been running since April 14, and had generated 29.27 Bitcoins that were funnelled into three electronic "wallets."

The company later explained that it had conducted some internal tests of the Bitcoin mining software using "consenting administrators' accounts" as part of its routine practice of initiating "private tests on potential new products and tools that might interest our community." Those tests ended on April 13.

"It came to our attention last night, however, that an employee who was involved in the test has been using the test code for his own personal gain since April 13," said the posting on the ESEA website Wednesday.

"We are extremely disappointed and concerned by the unauthorized actions of this unauthorized individual."