I'm the GM and author of my own system, which we have been playing for a couple of years now. Last year, four completely new members joined. Two players are giving hints to others even when their characters aren't around. As this is cheating for me, they have been losing some EXP for it. This helped for a while. However, last time, the group decided to accept the punishment and "cheated" intentionally.
One player (Vincent) was mind controlled and I planned to use him as a betrayer. Another player (Vanessa) knew about this, but her character wasn't with the group, as Vincent's character was about to fulfil my plan. Vanessa accepted the punishment and blurted out my entire plan, leading to the massacre of Vincent's character.
In my eyes, that was unacceptable, so I decided to increase the punishment for future evenings to a removal of all EXP gained that evening if a player cheats. In addition, if the player has already lost all their EXP, I will remove one random player’s EXP too. I hope that the players won’t risk cheating any more.
I know this is harsh, but I'm desperate to solve this problem, since my punishments have clearly become acceptable to them...
Did I go too far? Are there better ways to handle this problem?