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The intent for creating the encryption program is an important issue here, and could have had an effect on how it was handled. Why did they want an encryption program? So they could talk to each other about where the cool secret treasure is? So they can organise to clean out an area tomorrow at time X? So they can do anything else, that they don't mind the staff knowing about, but don't want other players to know?
If that was the case then a simple "could you give me the encryption program so I can distribute it amongst the staff" probably would have solved the issue.
However the more likely scenario is they wanted privacy from the staff and players. Either to cheat, or just so the staff can't spy on them. Those two scenarios couldn't be tolerated.
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