US regulators have smacked games biz ESEA with a $1m fine for surreptitiously installing a Bitcoin miner in its software.

The settlement was announced on Tuesday and means ESEA gaming will pay the state of New Jersey $325,000 of its $1m fine upfront, and the rest will be scrubbed if the company has a clean record for the next ten years.

The company had 'fessed up in May to an employee using "test code for his own personal gain" to install a GPU-based Bitcoin miner on ESEA game software deployed across 14,000 PCs.

That employee was fired, and the company poured the $3,700 worth of Bitcoins into a prize pot for its gaming clientele, and donated $7,427.10 to the American Cancer Society.

"At the very least your melted GPUs contributed to a good cause," wrote chief Eric Thunberg in the forum at the time.

Though this was an effective mea culpa, the state regulators have decided to make an example out of the company, and so have fined it almost a hundred times the value of its ill-gotten funny money.

"This case should serve as a message that we are committed to protecting New Jersey consumers, and that we will hold accountable anyone who seeks to exploit them through misleading claims, deceptive practices or the invasion of their computer privacy," said acting attorney general John Hoffman in a press release.

Unfortunately for ESEA, much of the regulator's announcement seems to misinterpret the way the ESEA client software worked, and levels allegations of privacy compromise at it as well, which ESEA disputes.

"The press release issued by the Attorney General about our settlement represents a deep misunderstanding of the facts of the case, the nature of our business, and the technology in question," ESEA wrote. "Moving forward, it is our intent to provide our community with confidence that ESEA will be taking every possible step to protect your privacy."

The company plans to roll out a new section on its website that clearly outlines its privacy policy, and is going to conduct regular audits with a "third party specialist" to make sure ESEA is secure.

But given the vertiginous rise of Bitcoin in recent months (at the time of writing, Bitcoins on MT Gox were trading for around $600 apiece, compared to around $130 in May) we reckon the temptation by people to splice miners into client software will only grow over time. Watch your GPU utilization, folks. ®