During the last big large scale conflict, an alliance called CO2 defected from its parent coalition The Imperium to the other side. This was a big loss to the Imperium - CO2 were one of their larger and better groups of fighters. It turned the tide of the war and the Imperium were left with emnity towards CO2 due to their betrayal.
In the time since then, Gigx who runs CO2 has (among other things) been annoying people inside and outside his alliance over various diplomatic incidents. One of those was TheJudge who was a leader in CO2 (but subordinate to gigx). Simultaneously TheJudge was being slowly talked into betraying CO2 by a couple members of the Imperium. This was significantly helped by the three of them being on a player elected group of representatives to the developers, that meets in person a few times a year.
TheJudge had enough power and control over the alliance and its assets that when he eventually decided to actually jump ship, he could sell off ships, space stations ('citadels') and other expensive things owned by the alliance. The Imperium are taking credit for this betrayal - they consider it 'revenge'.
Up to now this is all classic Eve - betrayal by people you trust. The postscript is less nice though: gigx in a moment of anger asked in in game chat for real life contact details for TheJudge so that he could 'cut off his hands'. This is obviously not OK and CCP banned gigx permanently. This has the side-effect of putting the final nail in the CO2 coffin.