207B. How Epstein's Club Affected Gaming

Recent revelations are filling in key gaps in questions I've been asking and writing about going back to 2005. Gaming and crypto business models were under the Club's control at the highest levels.

“When you see that in order to produce, you need to obtain permission from men who produce nothing;

When you see that money is flowing to those who deal, not in goods, but in favors;

When you see that men get richer by graft and by pull rather than work, and your laws don’t protect you against them, but protect them against you;

When you see corruption being rewarded and honesty becoming a self-sacrifice — you may know that your society is doomed.”

— Unknown 20th Century Attribution [Emphasis added by me]

[I ended up completely rewriting this paper before publishing it because there was such a firehose of new information coming out of the Epstein file dumps that it was overwhelming. The elements most critical to my story so far have flown under the radar of regular media so I had to investigate carefully]

When I went to the Los Angeles Times to drop the tea on just how much money people were making selling virtual goods in Everquest, in April of 2000, I was not intending to embarrass Sony Online Entertainment or any other developer. I was attempting to warn them what was coming. That “what was coming” was Everquest and other early MMO’s being farmed on an industrial level, with 3rd parties extracting billions of dollars from gamers and game developers.

Because SOE treated my article as a threat, not a warning, I had to stay anonymous and was not able to help defend SOE from what was coming. Meanwhile, across town in Encino, there was a mansion shared by the three founders of Digital Entertainment Network (DEN). They likely got The Times delivered to their door and one of the three, Brock Pierce (an avid Everquest player), almost certainly read my article. Unlike SOE leadership, he understood what I was warning about.

But he was a bit busy with playing EQ, running DEN, and hosting wild parties. Some have described these as sex parties, and the three would soon be accused of sexually inappropriate activities. When his cofounder and house mate Marc Collins-Rector was issued an arrest warrant for sex crimes, all three of these guys fled to Spain. That was the end of DEN, but now Brock had a lot more free time. He decided that if anyone was going to set up the gold farming factories that I predicted in my article, it was going to be him.

The Creation of IGE

So Brock founded Internet Gaming Entertainment (IGE) while in Spain, officially in 2001. Marc (the sex offender) claims to have helped him set up the company. Marc would end up being convicted in Spain in 2002 but the other two partners managed to avoid prosecution. Brock would return to Los Angeles, where I got the chance to interact with him when he was part of a press event at a local bar and grill. I was a journalist at this point and I confronted him and told him his activities were harming gamers and game developers. I received a standing ovation from the crowd.

I honestly don’t remember much else about him other than he is really short and didn’t know how to handle the press. I do remember a much taller woman on his arm, who was shockingly pretty. I had previously worked as the trainer for the USA and UCLA women’s track teams, so I’m hard to impress. I mention this because it becomes relevant later in this paper.

Later, as when I start connecting all the dots to Jeffrey Epstein. According to one of the files, which the press doesn’t seem to see as significantly as I do, has Brock telling Jeffrey that he was good friends with “Steve” [Bannon] going all the way back to 2002. Steve was a movie producer back then, and since Brock was a child actor I would imagine this is how they first connected. Given the nature of these individuals and the culture, they likely also partied together.

Handing the Baton Off to Bannon

Brock would eventually settle or avoid all of his sexual impropriety allegations. But the negative attention he was getting made him a bit too hot for a public leadership position. His investors (which would soon include Goldman Sachs) wanted a change of leadership. The press back then, and still today, describe this as something of a hostile takeover. But the reality was that Brock handed the baton to his friend Steve Bannon, completely consensually. This made Goldman Sachs very happy, because Bannon had previously been their employee and was positioned perfectly (for Sachs) to lead this new venture.

The problem for me was that I was completely unaware of this whole change of direction and power level. My efforts to solve the gold farmer problem were completely self funded, I didn’t even have support from a university. If I had known I was on a collision course with Goldman Sachs, I probably would have done anything other than what I ended up doing.

Solving the Gold Farmer Problem

The obvious problems with gold farming were mostly in two categories:

1. Chat was killed server-wide on all MMO’s as gold sellers would spam mercilessly. This was not only very immersion breaking, but also just made it difficult for these early gaming communities to interact.

2. Players would be forced to compete directly with gold farmers and bots for resources. Having so many farmers acted as an economic Denial of Service (DoS) attack on the entire game community. Worse still, the farmers would then turn around and sell back the resources to gamers that they had just pillaged from them.

This was a very frustrating situation for gamers. But the primary problem with gold farmers wasn’t visible to gamers. It didn’t seem to be visible to developers either.

Literally billions of dollars were flowing out of gaming economies and into the hands of third parties. In this case, mostly Goldman Sachs. Those billions should have flowed from gamers to developers, who could then hire more employees and make more (and better) games. Instead these dollars were flowing to places where they would never return. The Circle of Life of gaming was being ripped apart. Massive layoffs, which would continue for years and years, were the direct result.

Economists have various terms for this extraction. “Economic Leakage”, the “Divider Effect”, “Structural Predation”, and even The Walmart Effect.

I’m not sure anyone else was noticing this, but it was crystal clear to me in 2005 when I committed to solving the problem and putting IGE out of business. The economic situation was a lot like how Walmart could park a super store in a small town, shut down ALL the competing small retail businesses, lower wages, offer minor discounts, and then send the life blood of that town to an entirely different state. Walmart harmed a lot of towns across America this way. But what Goldman Sachs was doing was targeting a specific community (gamers) and was location agnostic. It didn’t matter where on Earth you lived or worked, GS was sucking your entertainment essence.

On a personal note, I was living in Desert Hot Springs (in California) when Walmart arrived. Initially there was optimism. But soon that turned to regret. I saw Walmart exploit my mother during the last productive years of her life. I saw the town wither, and even the uneducated residents soon understood what they had done by inviting that store into their town. I didn’t want the exact same thing to happen to the global gaming community.

The Vow

Since the age of 7 when the Santa Monica-Malibu School District began testing me, society began treating me as something that should not exist. My test scores were impossible. When teachers would look into the eyes of a small child and see the cold blue eyes of an adult or something alien looking back at them, they were afraid of me. I effectively had no parents growing up. My teachers put me in a corner and gave me years of study material at a time every month, with instructions to self-educate because the tests showed that there was nothing they could teach me.

I was completely isolated. I didn’t want to live my whole life like this. So at age 8 I took a vow not to use my skills to hurt people. This was a big deal because my criminally convicted violent sociopath father really wanted me to grow up to be Dexter. This Vow also prevented him from ever being my parent. The Vow protected the people around me, but didn’t help me much. People still were afraid of me, they didn’t know about the Vow.

When I turned 18 I rejected violence and all that military grooming. This was an update to the Vow with the “Pacifist” condition. In 2005 I took on a new Vow, to solve the gold farmer problem and shut down IGE. From my discussions with industry leaders, I knew two things: this problem was considered unsolvable and no one was going to help me.

What I didn’t know was:

• This is one of the biggest unsolved problems in the field of economics

• Goldman Sachs was running IGE

• Steve Bannon had replaced Brock Pierce. I wouldn’t even know who that was until years later.

• GS had intimate connections with USC where my future mentors were teaching.

• I didn’t know what The Club was.

• I didn’t know that the CEO of Blizzard, who’s problems I was trying to solve, was a member of The Club.

• I didn’t know that GS was massively infiltrated by The Club. We know two of their high ranking employees (Bannon and Kathryn Ruemmler) were the closest of friends to Epstein. Either of these people, or GS, could erase me with a snap of their fingers.

• I was on a collision course with one of the world’s most powerful companies, and three of Epstein’s closest and most powerful associates.

• I knew about Brock Pierce, but I didn’t know he would join The Club and become a billionaire.

I was completely out of my league. The worst thing I could possibly do would be to successfully solve this problem.

And, unfortunately, I did.

The USC Catch and Kill

I had hoped I could solve this problem in a year. The real duration would be 9 man-years (4.5 years working 16 hours a day). This was a crazy number, given the speed at which I do this sort of work, but I had already vowed to work to completion. After two years I determined to go back to school to study conventional economics, which I did at UC Riverside. As an academic nobody, I knew I would have to massively overachieve if I wanted to do something as crazy as create a new field of economic study (game economics) as a newly minted PhD.

I was also old enough to know that I would need political help because I was powerless. I identified the top two professors in the world that could validate my work, assuming I succeeded. The first was Professor Mike Zyda, the creator of the USC Gamepipe Lab. This is the top academic feeder to nearby Blizzard Studios. He also happens to have been a medical student prior, so he understands the neurological implications of my work.

The other prospective mentor was Professor Henry Jenkins. Previously at MIT (where Chomsky was), he had just moved to USC a few months prior. He is the godfather of transmedia and the one asked to testify before Congress after the Columbine massacre.

Both agreed to mentor me, and provided invaluable advice and emotional support during these hard times. I felt like this was actually going to happen, because if these two giants couldn’t protect me, no one could. All I had to do was solve this impossible economic problem. I figured that was the easy part.

I was right, and I did. I wrote the 33 page Sustainable Virtual Economies and Business Models solution paper in 6 days in August of 2009, on a borrowed laptop in a public library. The paper solved the Structural Predation problem plaguing MMOs worldwide. Zyda and Jenkins read and authenticated it. Unsolicited, university councillors (who liked me) risked their jobs to tell me that I was the top academic applicant.

All lights were green and I was ready for my Good Will Hunting moment. I got my application together and submitted to USC.

Then… I did what might have been the stupidest thing I will have ever done between the time I was born and the moment I die. I attached my solution paper to my application as a proof of merit.

This wasn’t Hollywood, and the real Good Will Hunting story is not filled with people overjoyed that the MIT janitor can embarrass academia. My paper and application was met with Silence. My mentors, who were protected from retribution by tenure and reputation, told me my application was rejected for “non academic reasons”.

That these giants were afraid to tell me what those reasons were, told me all I needed to know. Having grown up homeless on the streets of Los Angeles, compromising myself before slum lords and police to stay alive, I knew exactly what this was. This was a Warning. You only get one Warning, and you don’t even get that if you don’t look like you can play ball. Someone very powerful was generating threat.

This was 17 years ago, and I never applied again to a university.

Blizzard and Bobby Kotick

Zyda put me in direct contact with Blizzard leadership in 2009. I assumed that a mathematical solution to their multi billion dollar problem would get immediate attention.

Nope.

The same silence followed. This didn’t make sense. Even if this was all about racism, when there is enough money on the table people can forget their racism temporarily. This was before the abuse of employees became public, and decades before I would become aware of The Club and how all of these people were members or under direct control of members.

How would it be possible that Bobby Kotick (a very close friend of Epstein) would rather bleed billions of dollars from Blizzard to Goldman Sachs rather than ensure the golden future of the company? How is it possible that he ran the company into near bankruptcy and got a $400 million USD personal payout from Microsoft?

The Club operates a lot like The High Table in the John Wick IP. It is literally the world’s most powerful international crime network. If you aren’t under its influence, you just aren’t powerful enough for them to care about you. If you do another Club member a favor, you get a token. It’s worth more than money. You take care of your fellow club members and they take care of you. In return you are protected. From almost everything. Only a lunatic would cross them.

I Got Clubbed

After all these years, I feel like I finally have closure. It may be years or even decades before we know most of the debauchery these people were involved in, but it seems clear (at least to me) what happened here. I made the fatal error of putting my solution into my USC application. A low or zero security location. Once USC realized what I had done, someone quietly leaked to Goldman Sachs. Maybe even Blizzard. My application was quietly killed and instructions went out to never discuss it.

They had the paper, they didn’t need the author unless they planned to implement it. Which they didn’t. They were critically interested in making sure it wasn’t implemented. All of these shenanigans with virtual currencies would help produce even more complicated schemes in the world of crypto currencies, which would soon emerge. Not only did this make the Club billions, but it also was the ultimate way of laundering money, just as I warned in my 2009 solution paper.

Given that we’ve only seen the lowest threat Epstein files so far, and that some of the highest threat files seem to be “missing”, it could be some time before we can really connect all the dots, if ever. In the meantime, people like myself can only do our best to speculate who did what to whom. We know that Brock was giving Epstein inside crypto info, and talking about “sharing Ukrainian women”. Andrew was leaking critical inside info from the UK government. Ruemmler was doing the same from the White House and GS. Epstein was giving Bobby advice on how to run Activision Blizzard. The number of people from GS involved will no doubt end up being a much larger cohort than we currently know about.

A Note About Web3

Web3 applications, especially those utilizing cryptocurrencies to create a durable backbone for game economies, hold up the promise of virtual assets that could exist years into the future. The problem so far with Web3 assets is that other than a few widely held crypto currencies, there is no enduring public demand for these assets.

If a group created an enduring (“Sustainable”) game economy, with assets that held their value, then a cryptocurrency could help secure transactions in that space. Without the ability to both maintain asset value, and defend from 3rd party attacks on the economy, the application of Web3 technologies to game economies is premature and ineffectual.

To date what has been attempted is to launch the “Token” first and then the game world. These Tokens have no inherent value other than hype/hope. Since in all cases there is an attempt to “cash out” day 1 at the Token Generating Event (TGE), money is extracted from these inherently worthless systems. The only way that is possible is because the aggressive group has some sort of “right of first sale” over the target group (typically gamers). By the time the gamers have the ability to sell, the token is already worthless, and their investments have already been transferred to the aggressor.

These aggressors learned their early skills during the “gold farming era”. As you can see from the narrative in this paper, those aggressors already have decades of experience, predating the invention of cryptocurrencies.

Thus so far Web3 gaming applications have all been scams and have cost rank and file gamers a lot of money. To create the sort of value that these entrepreneurs advertise, they would need to have that 2009 technology. Either transferred from me or re-developed independently. That would be quite a lot of work, and an effort that AI would not be able to accelerate as AI operates on public human knowledge. It doesn’t do well creating new knowledge.

Of course a game economy is only as good as the world it is attached to. So creating something like this would be a large scale group effort and not something I could do independently. [AI could theoretically speed up that element, since it has enough content available publicly to “borrow”.] Here there exists a mandatory interdependency, something that my long term readers will recognize that I promote and create intentionally, as that gives humans a reason to exist and cooperate.