Riot Games fines Cloud9 $175,000 for violating LCS contract rules

Riot Games has fined North American esports organization Cloud9 $175,000 after the organization issued equity to its players. This result is due to Cloud9’s violation of League of Legends Championship Series (LCS) rules where the organization’s payments of stock equity were excluded from the team’s contract summary sheets.

Riot Games’ ruling

Riot Games alleges that Cloud9 failed to update the company during a period in June about “establishing a baseline of accurate information” surrounding player payments in the LCS. While other LCS teams submitted their information, Cloud9 did not provide details about the stock payments in the documents. However, a “clerical error” from Riot Games meant that the existence of the restricted stock units (RSUs) being issued was only flagged a month later. Since Cloud9 was competing at the 2019 World Championships, Riot Games delayed action until after the event.

Before November 2017, this rule did not exist. However, what is called Rule 2.5 was subsequently implemented, which forbids team owners from playing on an LCS team. Cloud9 ownership stated that they were not aware of the rule change and didn’t understand that the restricted stock units were “against League rules.” In addition, the organization said it did not provide the information because it was not part of the contract process where “(the) day-to-day staff may not have had visibility on the RSUs, and upper management was not reviewing summary sheets.”

Cloud9 fined $175,000

The initial $175,000 in fines is broken down into seven $25,000 fines, due to seven players receiving the stock equity from the esports organization. Cloud9 will also pay at least $330,000 in restitution, with the possibility of its rising to $650,000 in additional fees. This amount depends on the payments to past and present players, along with sales of the equity.

Riot Games has stated that the $175,000 fine will be donated to charity. What do you think about this situation? Let us know about your opinion, and keep up with Daily Esports for all of your League of Legends coverage.