Bitcoin mining firm Butterfly Labs settles FTC charges
18 February 2016 | 6135 views | 0
The US Federal Trade Commission (FTC) has settled charges against a Bitcoin mining hardware outfit accused of charging people thousands of dollars for machines that were never delivered.
The FTC sued Butterfly Labs in 2014, accusing the firm of deceiving thousands of consumers about the availability, profitability and newness of Bitcoin mining machines. The company took upfront payments, totalling several million dollars, from customers and then failed to deliver the machines or sent them only after they were useless because mining had become more difficult.
The settlement comes weeks before the case was set to go to trial. It means that of a judgement of $38.6 million, Butterfly Labs will pay just $15,000, with the company's part-owner, Sonny Vleisides, adding another $4000. The balance is suspended because of the defendants' inability to pay. General manager Darla Drake will have her judgment of $135,878 suspended once she surrenders the cash value of all Bitcoins she obtained using company machines.
Butterfly Labs, which is still operating, has also been banned from "making any misleading claims about their products" and taking up-front payments for Bitcoin machines unless they are available and will be delivered within 30 days.
Jessica Rich, director, bureau of consumer protection, FTC, says: "Even in the fast-moving world of virtual currencies like Bitcoin, companies can’t deceive people about their products. These settlements will prevent the defendants from misleading consumers."
In the wake of the settlement, Butterfly Labs has posted a statement on its site "addressing misperceptions" - insisting it paid out some $20 million in refunds over 2013 and 2014 and quibbling over how long deliveries were delayed.