FTC claims Bitcoin miner maker Butterfly Labs engaged in fraudulent and deceptive practices

By Shawn Knight
Sep 23, 2014
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  1. The Federal Trade Commission has filed a complaint against Bitcoin mining hardware maker Butterfly Labs, a Missouri-based company they claim have engaged in fraudulent and deceptive practices.

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  2. Nima304

    Nima304 TS Guru Posts: 365   +81

    It's about time. I pre-ordered one of their miners back in January 2013. By October 2013-ish, the miner was entirely useless, given the rising difficulty in mining Bitcoins. I was going to open a FTC complaint myself and sue, but they finally refunded my money in February 2014 or something like that. Throughout that entire period of time, they were trying to get people to upgrade their product, and were refusing refunds because "all sales are final," holding that position even though 90+% of people still hadn't received their products, and a considerably portion of those who had were having serious issues with the miners. I hope these people rot in jail.
    erickmendes likes this.
  3. GhostRyder

    GhostRyder This guy again... Posts: 2,190   +589

    I knew this was a scam awhile back based on what many friends were saying including one who was an avid miner and actually ordered/received his stuff. The waiting list was so astronomically long that it made me wonder how people could think this was going to be a good idea. The friend I speak of actually got some of the very expensive mining hardware (Some of the 3k per card equipment awhile back) and when he finally received it he swore it had all been used before he got it.

    My guess is that they used the money people were sending to make the equipment, used said equipment to mine until it was not as profitable or next gen stuff was ready, then sent that equipment down the line satisfying just a bear minimum of customers while making themselves rich on multiple fronts (Mining and selling mining equipment). It became quite clear it was a scam after awhile because I rarely ever saw these devices in circulation. Even if you consider they were backed up with so many orders more of these machines/cards had to be around especially if they were producing as fast as they claimed they were.

    None of it made sense except that it was a scam which it turned out to be. Hope these guys get what they deserve and everyone gets something back.
    erickmendes likes this.
  4. Skidmarksdeluxe

    Skidmarksdeluxe TS Evangelist Posts: 6,352   +1,945

    This is news? I was under the impression anybody or anything involved with Bitcoins was fraudulent and deceptive.
    EClyde likes this.
  5. veLa

    veLa TS Evangelist Posts: 702   +165

    Exactly. I don't know why people would even waste their time with phony stuff like that anyway.
    EClyde likes this.
  6. Yes, they should use Ripple instead. No mining necessary. Just open an account and buy Ripple through a gateway.
  7. And this company is still selling (phony) hardware.

    As you can see on there web site they have a cloud mining business, so they take people money, build there cloud, sell time on the cloud then after a while they send the used hardware to customer. Rince and repeat. Nice business.
  8. j05hh

    j05hh TS Booster Posts: 138   +22

  9. Just more evidence that Bitcoin has spawned fraud, crime and deception.

    Also, I never trust a guy with arms hairier than his face.
  10. Blue Falcon

    Blue Falcon TS Addict Posts: 161   +51

    You mean anyone selling mining specific products? I don't think gamers who used their GPUs for mining on the side when not gaming are scammers or frauds. It was a once in a lifetime opportunity that allowed many PC gamers to upgrade for free on the AMD side. Since most of us have other expenses in life, having an up-to-date PC for the last 5 years due to mining was a huge bonus. If you didn't take advantage of this, it doesn't mean those who did are automatically frauds and scammers.
  11. Skidmarksdeluxe

    Skidmarksdeluxe TS Evangelist Posts: 6,352   +1,945

    I was being sarcastic but haven't you noticed most things you read about Bitcoins these days has something to do with fraud?
  12. Skidmarksdeluxe

    Skidmarksdeluxe TS Evangelist Posts: 6,352   +1,945

    To fraudsters it makes perfect sense. To them it's an easy get rich quick scheme. Eventually things will tighten up and it won't be so easy.
  13. Puiu

    Puiu TS Evangelist Posts: 1,820   +485

    I'm surprised you waited that long. it's your money. it's also your investment that should have made you additional money. I would have just busted through their front door and beat the crap out of them for making me loose money everyday they delayed the shipping.
  14. Nima304

    Nima304 TS Guru Posts: 365   +81

    I had actually forgotten about it for a time, then finally got off my *** and started demanding it back. At that point, they'd changed policy to start allowing refunds for older pre-orders, so they refunded in full within a week. That being said, I'd paid in Bitcoins, and they gave me the dollar value of what those Bitcoins were worth when I first ordered, but I was just happy to have gotten some money back. Who knows if or when some of these people will get refunded.
  15. GhostRyder

    GhostRyder This guy again... Posts: 2,190   +589

    That is bull**** I would have bitched and said I wanted the bitcoins I paid back whether or not the value of them was higher now than they were in the past. That basically means they got free money from you which would piss me off if I were in your shoes.

    Either way I hope these guys get what's coming to them and end up losing all because they have taken advantage of people for their own personal greed.

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