Re: Butterfly Labs CEO 25 Million USD Mail Fraud — A Concise Summary of Evidence

[Phinnaeus Gage]

You know what I wonder?  Are all you whiners crying about a scam going to pony up an apology when the ASICs ship?  

My prediction:  Crickets.

I hope someone bumps this particular post after we ship the ASICs, I want see the rush of apologies.  I'll hold my breath.

Why would anyone need to apologize for voicing perfectly reasonable concerns today? Even if ASICs do ship as promised, the concerns were perfectly reasonable and deserve explanations.

I'll go one better. I will donate $100 USD, or Bitcoin equivalent, to a charity of your choice, Josh, when BFL delivers all that's promise. (somebody, please quote, for if I don't follow through, The Tag will be warranted)

With that out of the way, and since there's only about 22 employees of which the answer lies to my next question, who is Sonny K?

http://redstarmining.blogspot.com/2012_03_01_archive.html

I just got a reply from BFL -

On 5 March 2012 18:27, BFLabs <sonny@butterflylabs.com> wrote:
Hi Matthew,

Please excuse the delay in confirming your order.  We have been focusing on production over new customer inquiry and are just now catching up.  
Your PayPal payment has been received in full and your BitForce SHA256 Single is secure. Your date of purchase is 02/24/2012. I will keep you informed as to the expected delivery date of your order.
Thanks again for your interest in our product.

Kind regards,
Sonny K
BF Labs Inc.

I've also read that Butterfly Labs is no longer BF Labs Inc. Does that mean that BFly Consultancy in expected soon? The reason I'm asking is if I went through all the trouble and expense to incorporate Bruno's Barn Wood Emporium, I doubt I would change the name to Bruno's Barnwood Inc. LLC once I started recognizing a profit. This issue may be mute, but a concern arises just the same.

That said, the Sonny K question seriously needs addressing.

~Bruno~

[Inaba]

Total refund requests:  3
Refund requests granted: 3
Total positive private emails, PMs: 14

Basically, the people bitching and moaning for the most part don't appear to be customers or they don't want it known that they are being hypocritical by publicly decrying BFL yet continuing to patronize BFL.

Bottom line is, we aren't losing customers, we are gaining them, so we must be doing something right.  Like... providing superior equipment at reasonable prices.  Just a start.

@Bruno I am glad to see you stepping up to the plate, it puts you head and shoulders above all the others assuming you follow through.  The charity would be the EFF.  BF Labs and Butterfly Labs are the same company.  Why they were originally differentiated, I am not sure off hand, it happened long before I had any part in BFL.

[Phinnaeus Gage]

Total refund requests:  3
Refund requests granted: 3
Total positive private emails, PMs: 14

Basically, the people bitching and moaning for the most part don't appear to be customers or they don't want it known that they are being hypocritical by publicly decrying BFL yet continuing to patronize BFL.

Bottom line is, we aren't losing customers, we are gaining them, so we must be doing something right.  Like... providing superior equipment at reasonable prices.  Just a start.

@Bruno I am glad to see you stepping up to the plate, it puts you head and shoulders above all the others assuming you follow through.  The charity would be the EFF.  BF Labs and Butterfly Labs are the same company.  Why they were originally differentiated, I am not sure off hand, it happened long before I had any part in BFL.

Great! Please clarify EFF as to who the charity is. I look forward to donating to them once this issue is hopefully behind us.

Now as to who is Sonny K at <sonny@butterflylabs.com.

Clearly, it's not Sonny Vleisides, but if it is, we're back to the trust issue which got this whole ball of wax a rollin' again.

~Bruno~

[Inaba]

Electronic Frontier Foundation.  As for Sonny K, hopefully BFL_Sonny will address that when he posts.  As I understand it, he will be working on a response this weekend.

[MrTeal]

Total refund requests:  3
Refund requests granted: 3
Total positive private emails, PMs: 14

Basically, the people bitching and moaning for the most part don't appear to be customers or they don't want it known that they are being hypocritical by publicly decrying BFL yet continuing to patronize BFL.

Bottom line is, we aren't losing customers, we are gaining them, so we must be doing something right.  Like... providing superior equipment at reasonable prices.  Just a start.

@Bruno I am glad to see you stepping up to the plate, it puts you head and shoulders above all the others assuming you follow through.  The charity would be the EFF.  BF Labs and Butterfly Labs are the same company.  Why they were originally differentiated, I am not sure off hand, it happened long before I had any part in BFL.

Interesting that people are asking for refunds.

Inaba, in the past BFL hasn't transferred preorders, but in light of the current situation would you allow someone who is interested in getting out to sell their preorder to another person and have BFL ship to the new owner?

[nolo200]

I think it's fishy that their address, 2507 JEFFERSON KANSAS CITY, MO 64108 (His name is literally on the building), is clearly not the place that some of the pictures on their website/forum were taken

[Phinnaeus Gage]

Electronic Frontier Foundation.  As for Sonny K, hopefully BFL_Sonny will address that when he posts.  As I understand it, he will be working on a response this weekend.

If I understand your post correctly, Sonny is not too concerned about his investment in Butterfly Labs nor its customers if he's planning on waiting till the weekend to address a few easy questions and concerns in regard to BFL. If I were Sonny, I would have addressed them yesterday, no later than today, so that I can enjoy the weekend, readdressing further concerns come Monday. But that's me.

Please, Josh, don't take any harshness that may be coming across in my posts as being directed toward you. You're doing a heck of job conducting damage control under the circumstances.

Later, bud.

~Bruno~

PS: I need more info on EFF. I won't renege on my offer, but I am curious as to who is EFF.

[malevolent]

PS: I need more info on EFF. I won't renege on my offer, but I am curious as to who is EFF.

I'm pretty sure he meant:

https://www.eff.org/

(good choice IMHO)

[repentance]

I think it's fishy that their address, 2507 JEFFERSON KANSAS CITY, MO 64108 (His name is literally on the building), is clearly not the place that some of the pictures on their website/forum were taken

Which photos?  They're not maintaining that all of their products are manufacture, assembled and shipped from that address.

PS: I need more info on EFF. I won't renege on my offer, but I am curious as to who is EFF.

EFF declined to accept Bitcoin donations last year.

https://bitcointalk.org/index.php?topic=20185.0

[ydenys]

With all of these annoying BFL/ASIC threads you cannot help it but to think that any legitimate company would have already released at least some minor verifiable details about their key product to avoid losing any more customers. However you may choose to under/overestimate intelligence of the key people in this tiny company and compare it to their customers’ one, there is a clear business fault and continuous loss of custom/repute/funds which is taking place now. I would normally think that no sane business owner would stand such evident and easily rectifiable loss unless he/she had some hidden agenda.

Total refund requests:  3
Refund requests granted: 3
Total positive private emails, PMs: 14

Sorry, Josh, but you are counting 14 pms as somehow being offset for 3 refunds? (I’d fire you on the spot ). What about the new/lost orders? Your pre-order process is going to last until you successfully ship first working device, until then you are losing both existing and potential customers due to this kerfuffle. There is nothing unreasonable (taking into account the state of competition) in releasing some solid product-related data (if you have such). Granted, i/you may not know enough about the competition to make such assumption. If so – do make it clear instead of this pointless posing/picture posting.

[CJGoodings]

Man, its sad there's still people defending all this bullshit. I guess i would be pretty sour too if i threw all my money into a bottomless pit, which is starting to look more bleek by the second.

ITS CALLED A LONG CON PEOPLE.... has everybody already forgotten that pirate paid out on time for almost a year before taking off with millions.

[repentance]

Man, its sad there's still people defending all this bullshit. I guess i would be pretty sour too if i threw all my money into a bottomless pit, which is starting to look more bleek by the second.

All you can do is put the information out there.  If people want to believe explanations which are demonstrably bullshit, that's their problem - at least they've had the opportunity to make an informed decision about whether or not to deal with BFL.

[bitcoinBull]

You know what I wonder?  Are all you whiners crying about a scam going to pony up an apology when the ASICs ship? 

My prediction:  Crickets.

I hope someone bumps this particular post after we ship the ASICs, I want see the rush of apologies.  I'll hold my breath.

Why would anyone need to apologize for voicing perfectly reasonable concerns today? Even if ASICs do ship as promised, the concerns were perfectly reasonable and deserve explanations.

Agreed. Inaba's response was uncalled for.

I was considering placing a pre-order, but I will certainly not knowing that the CEO was previously indicted in a $25m fraud. Looking forward to BFL_sonny's response.

[CJGoodings]

So it looks like all you need to do to gain instant rep in this community is buy a stack of fgpas, slap your stickers on the side, and resell it for a markup.

[elux]

Basically, the people bitching and moaning for the most part don't appear to be customers or they don't want it known that they are being hypocritical by publicly decrying BFL yet continuing to patronize BFL.

Your tone is quite unbecoming of a businessman.

Bottom line is, we aren't losing customers, we are gaining them, so we must be doing something right.  Like... providing superior equipment at reasonable prices.  Just a start.

Stop social proofing. Start proving you're worth your mettle.

You know what I wonder?  Are all you whiners crying about a scam going to pony up an apology when the ASICs ship?  

Actually,

Few people have directly stated that BFL ASICS are vapor, or that BFL is a scam.

That your president / director is a convicted scammer is simply a material fact.

You admitted this. Good. That's a start.

However, you (Butterfly Labs Inc.) culpably took steps to withhold this information, and withheld last names of all employees,
in direct continuation of Sonny Vleisides documented modus operandi from previous long running scams. (1)

For this, you should be the one apologizing, in the case that BFL is otherwise legitimate.
(Which seems possible, though perhaps not overwhelmingly likely, when seen from the outside.)

Your transparency is hardly better than that of Pirate & Company.

Thus, clearly, your next move should be to do everything in your power to show honesty through transparency.

There are many, many, many warning signs beyond the verifiable evidence that has been posted so far.
Stuff that hasn't been brought to light yet, and should make any prospective investor uneasy.

(E.g: The references to non-existent Medical Technology on BFL's website.)

You knowingly withheld extremely pertinent information at the peril of your customers.

Did it not occur to you that this would predictably backfire?
Did it not occur to you that this is a REALLY, REALLY BAD IDEA?

I'm not a BFL customer. I don't have any vested interest one way or another.

But after lining up some of the pieces I felt sick to my stomach. Hence this thread.

Absolutely no one should be placing pre-orders with you under the circumstances.

I hope you're not furthering another of Sonny's many documented schemes to defraud (whether knowingly or not).

Have you considered that you may be (knowingly or not) furthering a scam?

Can you provide any convincing argument to the contrary?

I pause to note that this should be trivially easy if ASICs are anywhere close to being shipped..

If any of the whiny allegations are unfounded, you are hereby cordially encouraged to demonstrate it by directly confronting them.

Use this opportunity to crush the "crying whiners" under the heavy heel of the truth!

Then we can stop shouting, go about our business, and everyone will be happy for it.

BFL_Sonny's post read like fake sincerity, blame shifting and misdirection at best, and at worst coldly calculated lies.

"Oh yeah, let's make use of Joe Bitcoin's anti US Govt. bias to evoke sympathy. That'll work." Please.

(Okay, it worked, of course it worked.)

You (BFL) didn't address one, not one of the allegations outside of what's been proven beyond doubt by weight of official, public documents.

This hardly signals interest to set things straight.

As it stands, I think you are lying, or being lied to, or some combination thereof.

Come clean.


Three quick questions, in the interest of transparency and all:

• Is Sonny Cris Vleisides the founder of BFL?
• What is the contact information of his parole officer?
• What is your response to the following:

It has been demonstrated that BFL Single is a pair of Altera EP3SL150F780 chips.

This chip is no longer manufactured, and the official price from digikey, Altera's authorized distributor, is $2,184.99 per chip.

That's almost $4,400 per board just for the chips.

Obviously since the single sells for $600 they are not paying anything close to full price for these chips. But since they are no longer manufactured there is a finite supply, and with the huge demand they surely can see that the End Is Near for the Altera-based product line.

So now it fits together: they aren't ruining a good thing -- the good thing is over whether they like it or not.

They have run out of cheap chips. Without the insane more-than-5x cost advantage over the competition they can't compete anymore, so they pretty much have to close up shop.

But wait.

If you have to close up shop anyways, why not go out with a bang? Especially when you have an experienced fraudster running the company? The company is toast without the cheap chips anyways, so why not run off with a pile of preorder cash? Better yet, tell the people you sold product to that they can send the boards back as part of a "trade in". Remember, there are no more cheap chips, so the supply of these boards is about to get cut off. And mining boards turn electricity into anonymous, untraceable cash, so running off with them is about as safe as running off with BTC.

You may or may not believe their ASIC announcement is a scam, but either way the claim that "oh they have so much to lose by scamming people why would they do that" doesn't hold water. Their existing product line has a fixed lifespan -- ASIC or not.

Source: http://www.reddit.com/r/Bitcoin/comments/1084b1/why_would_bfl_turn_a_good_thing_into_a_scam/

I'll be awaiting your reply.


(1)

The master mind behind this scam is James Ray Houston apx. 60 years old. He gained fame in 1974 when he ran for Governor in Nevada.
His accomplice is Sonny Vleisides apx. 30 years old. Both from Kansas City originally .... However, these guys are very slick and try very hard not put their names on anything.

[Phinnaeus Gage]

Man, its sad there's still people defending all this bullshit. I guess i would be pretty sour too if i threw all my money into a bottomless pit, which is starting to look more bleek by the second.

ITS CALLED A LONG CON PEOPLE.... has everybody already forgotten that pirate paid out on time for almost a year before taking off with millions.

Luckily we have a backup plan. User DonShrents will just call Sonny's dad if...

Seriously, EFF will be fine, and can easily do it via fiat when the time arrives. Proof will be offered up when the transaction transpires.

I can't wait to read what the answer will be in regard to who is Sonny K.

~Bruno~

[nedbert9]

Bottom line is, we aren't losing customers, we are gaining them, so we must be doing something right.  Like... providing superior equipment at reasonable prices.  Just a start.

Stop social proofing. Start proving you're worth your mettle.

BFL's fortunate position is due to being first to market.  This is the single greatest advantage BFL has.  It has essentially captured the market in a void of competition and 'trade-in' tactic (which isn't a bad thing taken alone) that forces customers to make a purchase decision that is all, but bound to economic necessity.


Congratulations on being first to market with a (yet to be released) full custom ASIC miner.

[nebulus]

BFL's fortunate position is due to being first to market.  This is the single greatest advantage BFL has.  It has essentially captured the market in a void of competition and 'trade-in' tactic (which isn't a bad thing taken alone) that forces customers to make a purchase decision that is all, but bound to economic necessity.


Congratulations on being first to market with a (yet to be released) full custom ASIC miner.

Lol, how the fuck is this relevant?

[Inaba]

Basically, the people bitching and moaning for the most part don't appear to be customers or they don't want it known that they are being hypocritical by publicly decrying BFL yet continuing to patronize BFL.

Your tone is quite unbecoming of a businessman.

These forums are unbecoming of a venue for public discourse, what's your point?  

Bottom line is, we aren't losing customers, we are gaining them, so we must be doing something right.  Like... providing superior equipment at reasonable prices.  Just a start.

Stop social proofing. Start proving you're worth your mettle.

See above.

You know what I wonder?  Are all you whiners crying about a scam going to pony up an apology when the ASICs ship?  

Actually,

Few people have directly stated that BFL ASICS is vapor, or that BFL is a scam.

What is your definition of a few?

However, you (Butterfly Labs Inc.) culpably took steps to withhold this information, and withholding last names of all employees,
in direct continuation of Sonny Vleisides documented modus operandi from previous long running scams. (1)

This would be false, but it's neither here nor there.

For this, you should be the one apologizing, in the case that BFL is otherwise legitimate.
(Which seems possible, though perhaps not overwhelmingly likely, when seen from the outside.)

I'm sorry, why should I be apologizing again? I'm not sure I understand why I should apologize for a legitimate business that has delivered thousands of products as promised (if a bit late in the beginning).

Your transparency is hardly better than that of Pirate & Company.

Your next move should be to do everything in your power to show honesty through transparency.

Really?  What brings you to this conclusion?

There are many, many, many warning signs beyond the verifiable evidence that has been posted so far.
Stuff that hasn't been brought to light yet, and should make any prospective investor uneasy.

(E.g: The references to non-existent Medical Technology on BFL's website.)

We are not seeking investors at this time, but I will gladly take it under advisement when/if we do.

You knowingly withheld extremely pertinent information at the peril of your customers.

Which would be what?  What pertinent information was withheld exactly?  We have shipped products in the past, we will ship products in the future.  One of the employees past has absolutely no bearing on the ability of our company to ship products.

Have you considered that you may be (knowingly or not) be furthering a scam?

Yes, and either the scam is so elaborate that we have shipped product and spent a ridiculous amount of money on the development of ASICs as to be almost unimaginable or we are actually legitimate.

Can you provide any convincing argument to the contrary?

 

Yes, check back with me in about 6 weeks.

I pause to note that this should be trivially easy if ASICs are anywhere close to being shipped..

They are, however, you seem to be under the impression that the investment in this venture is trivial.  It's not.  We will not be giving away free strategic information to our competition as to our business plans, technology, etc...  As much as you want it (and the competition wants it), it's simply not going to happen given the amounts of money involved in the development of our ASIC products.

If any of the whiny allegations are unfounded, you are hereby cordially encouraged to demonstrate it by directly confronting them.

Again, I will in ~6 weeks.  When we ship the ASICs can I expect a public apology from you as well in these forums or are you going to slink off with the rest of the people and try to forget what complete asses you've been?

Use this opportunity to crush the "crying whiners" under the heavy heel of the truth!

Then we can stop shouting, go about our business, and everyone will be happy for it.

Do you seriously believe this?  There is literally nothing, nothing I can post short of shipping out free ASIC devices that would satisfy the people of this forum.  Not a single thing.  If you believe otherwise, you are exceptionally deluded.

As it stands, I think you are lying, or being lied to, or some combination thereof.

Come clean.

Great, come the shipping of the ASICs I expect a public written apology to both myself and BFL.

Three quick questions, you know, in the interest of transparency and all:

• Is Sonny Cris Vleisides the founder of BFL?
• What is the contact information of his parole officer?
• What is your response to the following:

1. The very specific answer to your question is no. I don't expect you to be satisfied with this answer, but it's what you get.
2. You have got to be joking, right?

It has been demonstrated that BFL Single is a pair of Altera EP3SL150F780 chips.

This chip is no longer manufactured, and the official price from digikey, Altera's authorized distributor, is $2,184.99 per chip.

That's almost $4,400 per board just for the chips.

Obviously since the single sells for $600 they are not paying anything close to full price for these chips. But since they are no longer manufactured there is a finite supply, and with the huge demand they surely can see that the End Is Near for the Altera-based product line.

So now it fits together: they aren't ruining a good thing -- the good thing is over whether they like it or not.

They have run out of cheap chips. Without the insane more-than-5x cost advantage over the competition they can't compete anymore, so they pretty much have to close up shop.

But wait.

If you have to close up shop anyways, why not go out with a bang? Especially when you have an experienced fraudster running the company? The company is toast without the cheap chips anyways, so why not run off with a pile of preorder cash? Better yet, tell the people you sold product to that they can send the boards back as part of a "trade in". Remember, there are no more cheap chips, so the supply of these boards is about to get cut off. And mining boards turn electricity into anonymous, untraceable cash, so running off with them is about as safe as running off with BTC.

You may or may not believe their ASIC announcement is a scam, but either way the claim that "oh they have so much to lose by scamming people why would they do that" doesn't hold water. Their existing product line has a fixed lifespan -- ASIC or not.

http://www.reddit.com/r/Bitcoin/comments/1084b1/why_would_bfl_turn_a_good_thing_into_a_scam/

I'll be awaiting your reply.


(1)

The master mind behind this scam is James Ray Houston apx. 60 years old. He gained fame in 1974 when he ran for Governor in Nevada.
His accomplice is Sonny Vleisides apx. 30 years old. Both from Kansas City originally .... However, these guys are very slick and try very hard not put their names on anything.

My response:  Absolutely fucking ridiculous.

[Shadow383]

Which would be what?  What pertinent information was withheld exactly?  We have shipped products in the past, we will ship products in the future.  One of the employees past has absolutely no bearing on the ability of our company to ship products.

Except that the part owner (CEO?) of your company is quite possibly violating his parole by collecting massive amounts in pre-orders like this.

By the way, why the hell can't you people just get a regular business loan to fund your first production ASIC batch? Y'know, like reputable businesses do.
I'd have thought having shipped a bunch of mini-rigs and a bunch of singles, you'd have the accounts there to get a cheap-rate bank loan or to bring in venture capital and do this properly...