LCS Fines Cloud9 A Total Of $175,000 For Violation Of Rules In Issuing Seven Players Stock Grants

LCS Fines Cloud9 A Total Of $175,000 For Violation Of Rules In Issuing Seven Players Stock Grants
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What a weird, strange trip it’s been.

The LCS has fined Cloud9 for their failure to report or catalog their actions of paying a handful of players through granting Cloud9 stock. As a result of this, Cloud9 is being fined $25,000 per player, at a grand total of $175,000 with seven players.

The players included are reported to be Eric “Licorice” Ritchie, Dennis “Svenskeren” Johnsen, Robert “Blaber” Huang, Zachary “Sneaky” Scuderi, Tristan “Zeyzal” Stidam, Nicolai “Jensen” Jensen, and Andy “Smoothie” Ta. Of these, the first five were active members as of this summer, which thereby breaks the rule set in place back in 2017 that stated that no active player is allowed to own equity within a team.

There are numerous reasons for this. For one, there’s the risk of a player throwing a game for their monetary gain through increasing or decreasing stocks. Another is that there’s the issue of a stockholder also being one of the main components of the team of which they hold stock.

A primary issue isn’t even necessarily the breaking of this rule so much as that Cloud9 failed to report the stock grants. By failing to proactively notify that changes had occurred within these contracts, Cloud9 broke the rules of disclosure to the league, which are in place to keep a hold on corruption and increase transparency.

On top of the issue, the following will occur and can be found in the TL;DR that is placed at the top of the announcement on the official League of Legends site:

“In addition, Cloud9 shall be required to make payments to certain current and former players in connection with restitution for the stock grants and must negotiate with current players to extinguish existing stock grants. Players must have independent representation in connection with these negotiations.”

Cloud9 had several reasons for doing this, and the grants took many forms. Reportedly, some players were offered lower wages in exchange for the stock as part of their payment, while some were paid entirely in the stock itself.

As a result of this, Cloud9 will be paying out the difference to those that were not compensated financially and were instead compensated through stock. Furthermore, those that still own stock and still are active participants in the team will be meeting with representatives to give up that stock and be financially compensated instead. You can read the entire statement and everything involved here.

All in all, it’s a strange problem to have in esports, which many of us like to think are free of these sorts of things. Cloud9 has remained in the rules quite a bit lately, and it’ll be nice for everyone once this dies down a bit.