I am very interested on this subject. I have been since
Kossin talked about it, but I never had the time to test it myself.
Disclaimer: My words can nad should be taken as subjective, as I am far too much interested in cultural games and I play Civ as a competition (do whatever it takes to win faster, attack the problem as if it was a mathematical one) rather than as a recreation of the real world. Luckily I don't have many records in the HOF tables to "protect".
My first impression and still the dominant one today is this:
- A new method has been found, it is faster than all other methods, hail
Kossin! hail
Kaitzilla! hail
WastinTime! I wish I was the one to discover this other method. Let the old ideas die, as we let other ideas die in the past (example: researching up to radio for the towers multipliers).
Now, after doing some maths and after listening to what people that have alrady tried the new method say, I consider that doing nothing is not an option. The mechanism is overpowered. Conversion rates of 4

per 1

are not well balanced.
What end result would I want to get in the end? I'd love to see this tactic predominant in some maps and suboptimal in others. I'd like to see this tactic as a complement to a typical cultural game in some special situations.
Am I in favor of banning? No. Mostly not. In part, yes. I'll explain:
- Gifting a city and then retaking it for a big profit is dirty. It shouldn't be allowed.
- But now, in a cultural game, stopping research after Liberalism and deliberately falling behind in techs is dirty and it's allowed.
- But now, in a single continent conquest game, stopping research after The Wheel and building nothing but chariots is dirty and it's allowed.
So a full ban it's not my preferred option.
Will I play this way sometime? Yes, I will, just as I have played only-chariots-conquest-games. I will play, perfect my methods, put a record in and never do it again, as I did with gold medals or other victory conditions.
My suggestion is to nerf the tactic to stop it being abusive. Several options come to mind:
- Ban gifting cities.
- Impose a 20 turns peace period after city gifting on the excuse "we won't attack our former colleagues"
- Limit the number of spy units you can hold at the same time to 5, as executives are (or as missionaries are limited to 3).
- Ban the spread culture mission.
- Change discounts and multiliers for the spread culture mission.
- Put a limit to the 5% calculation (5%, max 500c).
- Change the 5% calculation to a constant +100c.
- Change the 5% calculation to a 1% calculation.
- Make the spy diplo penalty a cummulative one.
- Make failed spy missions cost in

- Automatic close borders and war declaration (with consequent spy teleporting) upon the third spy caught on the same turn.
I am not the right person to consider the feasibility, impact on other legitimate strategies, or convenience of this proposals. I'd say that limiting the number of spy units you can have or be building civ-wide to 5 is the perfect solution.
I am very short of time. I am sure I am forgetting important things I'd like to add.
Thanks for reading. I will accept and defend any decision the HOF Staff and the xOTM Staff may take.
EDIT: The No-espionage ingame option is not a good solution, never ever allow this option in a competitive cultural game.