It's a thoroughly 21st-century heist: An online gaming service secretly leveraged thousands of users' computers to acquire money in the form of online-only crypto-currency Bitcoin.
E-Sports Entertainment (ESEA) is an established gaming league that hosts tournaments in games such as "Team Fortress 2," "Counter-Strike" and "League of Legends." Players can compete for prizes and prestige, and as with any e-sport, must submit to running a piece of software provided by the ESEA that watches for cheating and other issues.
Earlier in the year, ESEA was experimenting with integrating Bitcoin "mining" with the software client ? meaning that the user could opt to have their machine work on the complex mathematical problems that produce the virtual currency that has been in the news so much recently.
The virtual currency is created at a set rate by its users, but takes a huge amount of computing power (if Bitcoins were easy to make, they wouldn't be worth much). Distributed networks of hundreds or thousands of computers are often made to work together, and ESEA though their client might be a good way to do that.
Ultimately, they decided not to implement it ? it was more trouble than it was worth ? but one employee appears to have decided to go ahead and do it in secret. As a result, the Bitcoin mining code ran for weeks on users' computers, running their powerful graphics cards at maximum (which can damage them) and causing crashes and other trouble.
The community was suspicious, and users examining the software closely found the hidden mining software. It was brought to the attention of an administrator, who at first said it had only run for a couple days ? but later amended this, saying it had run for weeks and mined about $3,700 worth of Bitcoins.
Higher-ups at the ESEA quickly caught wind of the story and issued a formal apology; the Bitcoins ? or their dollar equivalent ? will be donated to charity, and the ESEA will offer support to anyone whose computer was damaged.
As for the perpetrator, it's unclear what will happen: Such a serious breach of authority and trust may certainly result in dismissal, but it's possible that hacking charges could also be involved, since running unauthorized code like this could qualify as a crime. And it's not the first time that Bitcoins have been the object of nefarious acts.
The recent Bitcoin craze has garnered a lot attention for the heretofore-obscure online currency, the value of which has skyrocketed in recent months. New users, services, and applications are sprouting ? including a Bitcoin ATM.
You can learn more about Bitcoin, including how it works and why it's suddenly in the public eye, in our recent article on the topic.
Devin Coldewey is a contributing writer for NBC News Digital. His personal website is coldewey.cc.
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Trustev, a Startup Battlefield company presenting today at TC Disrupt NY 2013, has developed a product to tackle online fraud using an algorithmic system of social signals, behavioural data and transaction history to create a “digital fingerprint” that lets companies verify that you are who you say you are when you are buying something online. The problem that Trustev — based out of Cork, Ireland — is tackling is big, and growing bigger. E-commerce is booming, with sales topping $1 trillion globally in 2012 and still on the rise. But the market also has a dark undercurrent in the form of fraud — specifically around people using other people’s identities to purchase goods online. Currently ID fraud is a $20 billion problem and growing at twice the rate of the e-commerce market. Beyond the very obvious issue of costing companies a lot of money, and consumers a lot of pain, there is another issue: traditional methods for trying to stem the problem are based mainly around human vetting. Pat Phelan, founder of Trustev and its CEO, says that today 27% of all transactions online are referred to contact centers for review working out to 200 man-hours ever year. “At the moment, e-commerce is only 5% of all commerce, so as it grows you will run out of human beings to process all those transactions.” And that’s not to mention the fact that current systems are inefficient. “Verification is a major operational cost,” he adds. “You have major cost centers created out of people Googling names, and trying to figure out if people are who they say they are.” The social networks that Trustev tracks for identity signals include Facebook, Twitter and LinkedIn as defaults. In different regions, it plans to add others such as Orkut in Latin America, V-connect (from Vkontakte) in Russia, and Sina Weibo in China. Users check in to social networks when checking out to speed up the process. Like other big data plays, the idea with Trustev is that it takes the mountain of data that is presented through these channels, and parses it and matches it up with other online activity associated with a person. This can also be used to help verify in a positive way, rather than simply to note when someone is not who they say they are. A classic example is the case of a person travelling: some payment networks, when