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

[LostDutchman]

http://bflfraud.com/

The text does not lie.

The Skype chat does not lie.

The images do not lie.

VERBUM SAT SAPIENTI EST!*

*A Latin phrase meaning: "A word to the wise is sufficient!"

[1714871930]

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[1714871930]

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[1714871930]

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[1714871930]

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[1714871930]

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[fcmatt]

http://bflfraud.com/

The text does not lie.

The Skype chat does not lie.

The images do not lie.

VERBUM SAT SAPIENTI EST!*

*A Latin phrase meaning: "A word to the wise is sufficient!"

I dont have the time to read all that. What is the smoking gun two sentence exec summary?

[SgtSpike]

http://bflfraud.com/

The text does not lie.

The Skype chat does not lie.

The images do not lie.

VERBUM SAT SAPIENTI EST!*

*A Latin phrase meaning: "A word to the wise is sufficient!"

I dont have the time to read all that. What is the smoking gun two sentence exec summary?

Right here:

Essentially what went down in this deal is that Cloudhashing had managed to get a BFL 1500 G/hs Minirig removed from the delivery queue and needed someone to verify its existence and quality before sending an amount someplace in the area of $100,000.00 to BFL for the purchase.

If this is true, and BFL is allowing people to skip the queue by paying more, without making this a published option for purchase, then I completely agree this is fraud.

[LorenzoMoney]

Ponzi schemes work the same way. A few people get retunrs, and the rest wait.

At this point, no matter what their original goals or intents were, BFL is a scam. If they had been honest about delays and the reasons for them, I would not say this. But, as long as they are still taking orders with such a big backlog, they are now scamming.

The admin of bitcointalk should change the title under their postings to say scammer, or low rep, or whatever it is they do when someone has a bad reputation on here.

I've been laughing at people who fell for the BFL scam for ages .. but when I say "Sure, ButterflyScams will surely deliver" on IRC then people still get upset because I don't have huge faith in this company.

Thank's for a very entertaining thread, guys. Keep up the good work.

btw, I know that BFL has delivered a few half-baked miners to a few select customers. Ducktape and glue.. oh my. I guess I could start saying "Sure, ButterflyScams will surely deliver .. SOMETHING"

They've actually delivered quite a large number of miners.  It's just their pre-order list is HUGE, and we only know of a small part of it.

[SgtSpike]

Ponzi schemes work the same way. A few people get retunrs, and the rest wait.

At this point, no matter what their original goals or intents were, BFL is a scam. If they had been honest about delays and the reasons for them, I would not say this. But, as long as they are still taking orders with such a big backlog, they are now scamming.

The admin of bitcointalk should change the title under their postings to say scammer, or low rep, or whatever it is they do when someone has a bad reputation on here.

I've been laughing at people who fell for the BFL scam for ages .. but when I say "Sure, ButterflyScams will surely deliver" on IRC then people still get upset because I don't have huge faith in this company.

Thank's for a very entertaining thread, guys. Keep up the good work.

btw, I know that BFL has delivered a few half-baked miners to a few select customers. Ducktape and glue.. oh my. I guess I could start saying "Sure, ButterflyScams will surely deliver .. SOMETHING"

They've actually delivered quite a large number of miners.  It's just their pre-order list is HUGE, and we only know of a small part of it.

But there's no evidence that they're a ponzi scheme.  They're just a company swimming in backorders.

[zeroblock]

Ponzi schemes work the same way. A few people get retunrs, and the rest wait.

At this point, no matter what their original goals or intents were, BFL is a scam. If they had been honest about delays and the reasons for them, I would not say this. But, as long as they are still taking orders with such a big backlog, they are now scamming.

The admin of bitcointalk should change the title under their postings to say scammer, or low rep, or whatever it is they do when someone has a bad reputation on here.

I've been laughing at people who fell for the BFL scam for ages .. but when I say "Sure, ButterflyScams will surely deliver" on IRC then people still get upset because I don't have huge faith in this company.

Thank's for a very entertaining thread, guys. Keep up the good work.

btw, I know that BFL has delivered a few half-baked miners to a few select customers. Ducktape and glue.. oh my. I guess I could start saying "Sure, ButterflyScams will surely deliver .. SOMETHING"

They've actually delivered quite a large number of miners.  It's just their pre-order list is HUGE, and we only know of a small part of it.

But there's no evidence that they're a ponzi scheme.  They're just a company swimming in backorders.

Same Same.

[Viceroy]

Go back to the first post, friends, the CEO of BFL was CONVICTED of MAIL FRAUD involving MILLIONS OF DOLLARS where he sent out a little trickle to people before the Ponzi Scheme collapsed.

And now you think, what, that they are NOT doing the exact same thing???

Einstein said insanity is doing the same thing over and over and expecting a different result.  

Once a mail fraud operator, always a mail fraud operator.

[SgtSpike]

Go back to the first post, friends, the CEO of BFL was CONVICTED of MAIL FRAUD involving MILLIONS OF DOLLARS where he sent out a little trickle to people before the Ponzi Scheme collapsed.

And now you think, what, that they are NOT doing the exact same thing???

Einstein said insanity is doing the same thing over and over and expecting a different result.  

Once a mail fraud operator, always a mail fraud operator.

So they're going to ruin a company arguably worth tens of millions by purposefully only shipping a few units when their margins are extremely high and R&D costs have already been sunk?  That makes zero sense.

The most sensible "scam" that BFL could pull is mining on the units themselves, but I don't see a whole lot of supporting evidence for that.

[Viceroy]

The company is ruined already, it has no reputation.  Only a fool or unwitting ill-informed person (victim) would purchase a unit from them today.

They sold people a product they had never built.  Now they ship in dribs and drabs, the same as Sonny shipped out his checks to his victims.

Personally I believe it is a "long con" and I believe they pocketed the pre-order money and will go bankrupt long before they fulfill their pre-order list.  

You are as likely to see a unicorn as you are to see BFL ship it's backordered products before they run out of money or get shut down by the fed.  



From my poll in the legal forum:

Is Butterfly Labs breaking the law?
Yes, American Federal Law   - 52 (52%)
Yes, Kansas State Law   - 4 (4%)
No   - 16 (16%)
I don't know   - 19 (19%)
Nobody Knows   - 4 (4%)
Yes, European Law   - 5 (5%)

https://bitcointalk.org/index.php?topic=247310.0

[SgtSpike]

The company is ruined already, it has no reputation.  Only a fool or unwitting ill-informed person (victim) would purchase a unit from them today.

They sold people a product they had never built.  Now they ship in dribs and drabs, the same as Sonny shipped out his checks to his victims.

Personally I believe it is a "long con" and I believe they pocketed the pre-order money and will go bankrupt long before they fulfill their pre-order list.  

You are as likely to see a unicorn as you are to see BFL ship it's backordered products before they run out of money or get shut down by the fed.  



From my poll in the legal forum:

Is Butterfly Labs breaking the law?
Yes, American Federal Law   - 52 (52%)
Yes, Kansas State Law   - 4 (4%)
No   - 16 (16%)
I don't know   - 19 (19%)
Nobody Knows   - 4 (4%)
Yes, European Law   - 5 (5%)

https://bitcointalk.org/index.php?topic=247310.0

Shipped in dribs and drabs?  They've shipped out far more TH/s than any other Bitcoin mining company.

A long con?  Again, they're going to ruin a company arguably worth tens of millions by purposefully only shipping a few units when their margins are extremely high and R&D costs have already been sunk?  That still makes zero sense.  Besides, they would have left in January when a bunch of people started asking for refunds at the same time.  That was the point in time where they had the most units on preorder, and it would have been the most profitable to run.  If they were going to run, they'd never have actually invested in R&D costs at all.

[Viceroy]

So you voted:

No   - 16 (16%)

The vast majority of poll takers disagree with an overwhelming number believing BFL is BREAKING THE LAW.  I acknowledge my poll is not scientific nor do opinions matter but if you believe the majority of respondents not only is BFL shady but CRIMINAL.

And I'll leave the "how many they've shipped" question for Phinneas and others.

If they were going to run, they'd never have actually invested in R&D costs at all.

Now see we have differing opinions about what exactly R&D is.  You seem to believe R&D means "hire some company to craft something for you".  I don't believe they have actually spent any money on actual "research" or "development".  Perhaps I am mistaken.  Phinneas???

[Rassah]

62.4% of people are armchair lawyers, dolling out justice in their underwear! And obviously whatever their opinion is is the law.  

Now see we have differing opinions about what exactly R&D is.  You seem to believe R&D means "hire some company to craft something for you".  I don't believe they have actually spent any money on actual "research" or "development".  Perhaps I am mistaken.

Did they pull the ASICs schematics, and motherboard designs out of their asses? Where did they find those really nice, solid aluminum cases? And who went all around the world negotiating contracts with companies to make all these things for them? Did they found some hapless volunteer?

[Viceroy]

Your statement depends on what the definition of "is" is. 
And outsourcing != R&D.

[SgtSpike]

So you voted:

No   - 16 (16%)

The vast majority of poll takers disagree with an overwhelming number believing BFL is BREAKING THE LAW.  I acknowledge my poll is not scientific nor do opinions matter but if you believe the majority of respondents not only is BFL shady but CRIMINAL.

And I'll leave the "how many they've shipped" question for Phinneas and others.

If they were going to run, they'd never have actually invested in R&D costs at all.

Now see we have differing opinions about what exactly R&D is.  You seem to believe R&D means "hire some company to craft something for you".  I don't believe they have actually spent any money on actual "research" or "development".  Perhaps I am mistaken.  Phinneas???

I don't give a crap what the voters say.  Mob mentality.  This is why we never have a true democracy - it'd be stupid, because people are easily swayed in opinion.

R&D expenditures can indeed be hiring another company to craft something for you.  It costs a boatload of money either way - if they were just going to take preorder money and run, why would they bother with spending millions on developing (or having someone develope) working ASICs?

As for how many have been shipped, please share what other companies are shipping large numbers of miners, enough to make up the current network hashrate of ~500 TH/s.  Avalon is failing to ship anything of any significance, AM has shipped gobs of USB keys and some blades, but those amount to only a few tens of TH/s, and no one else has shipped anything.  Where is this hashrate coming from, if not from BFL?  All of the top miners at BitMinter are running BFL machines.  I don't know about the other pools, but if BFL isn't providing all this hashrate, then WHO IS?

[Rassah]

Your statement depends on what the definition of "is" is. 
And outsourcing != R&D.

In case you missed some of the history about their internal workings, they actually have someone working with them who designs CPUs and circuit boards.

Also, outsourcing does = R&D, if you pay for and manage it. That's how R&D is done nowadays - it's outsourced to engineers in India and Russia

[bcp19]

This thread was an interesting read, a lot of opinion and lot of mud slinging, a crapton of outright lies and a fair amount of truth.

Since most of this thread is "he said/she said" or completely made up shit to cause trolling let's start off with FACTS, and these are VERIFIABLE FACTS.

1) BFL is shipping product - FACT.
2) Different product lines are shipping at different rates and are at different paid dates - FACT
3) BFL has had over 72,000 orders placed - FACT.

Sure, some orders have been cancelled, some refunds have been paid, but there's no number here.  We can acknowledge it happened, but not to what extent.

Let's step into fantasy a second... (For this I will be using some infor from http://bfl.ptz.ro/ to back up my points)  Let's pretend there are 72,000 total orders, that every order was for 1 item, that no refunds have been made and go from there.  We know as fact BFL is shipping Jalapenos that were paid for on Dec 5, 2012.  ~14000 orders were made by Dec 5th, 14/72 = almost 20% of Jalapenos ordered have been shipped (this IS still fantasy remember).  LS are listed at Sept 10.  ~8000 orders were made by Sept 10, 8/72 = 11.11%.  Singles are up to June 30th, ~2700 orders were made by June 30, so 2.7/72 = 3.75% and lastly we have Minirigs at pay date July 21, ~3700 orders had been made by 7/21, 3.7/72 = 5.1%.  I think it's safe to say this numbers are pure fantasy and makes it look like BFL needs another year to catch up.

Let's step into a different fantasy, but with some thought put into it.  It's June 2012, people are using FPGAs and GPUs, Network hash is about 12TH and people running 10GH are making over 6BTC a day.  They've invested 10's of thousands of dollars into their GPUs and are seeing $800-$900 a month in returns.  Mid June an announcement is made... ASIC preorders will open up on June 23rd.  The money spent on a 10GH GPU farm would buy almost 400GH of ASICs.  June 23rd rolls around, pre-orders open up and in less than a day 2000 people have placed orders.  Investors hoping to have the 1st units buy 20-50 units.  GPU farmers buy 5-10 apiece.  The average joe buys 1-2.  Lots os variable here, but let's pretend the average 1st day order is for 15 units of something.  Since it's still fantasy we'll say the remaining 70,000 orders were for 1 unit each.  Gives us some nice round numbers.  2k*15 + 70K*1 = 100k total units.  Let's look again at Jalapenos... Dec 5 is ~14,000 orders, but instead of 20% of the way through the order book, we're now at 42%!!  The Sept 10 orders of LS' with ~8000 now is 36% of orders!!!  The 2700 orders by June 30th make singles at 30.7%!!! and those ~3700 orders by July 21 = 31.7%...... wait.... only 1/3 or mini's have shipped... 10.6%   Still, Jalapenos will be completed in under a month,  LS and Singles may take 3 months and MINIs may take 4-5 months.  BUT!  THEY HAVEN"T RAMPED UP PRODUCTION YET!!!!!!!!!!!!!!!!!!!!!!!!

Ahh, I love that fantasy, it makes me all warm inside.

How about we try for something that MAY be fantasy but is a hellova lot closer to the truth.

We need some facts again...

1) Between Avalon and ASICMiner it is estimated they have added 160-180TH to the network.  Let's call it 180.
2) Current Network hash as seen http://blockchain.info/stats has been between 450TH and 500TH during the 8 hours I've looked at it today.  We'll say 450.
3) There's 270TH of missing network hash out there.

Where has this come from? 

Let's go back to http://bfl.ptz.ro/ a second. Using the 4951 orders listed on the site as a reference along with the 3575 Jalas, 1230 LS', 2678 Singles and 185 minis listed on it, we can infer on average 2 of every 3 orders has a jalapeno. 1 of every 4 has an LS, 5 out of every 9 has a single and 1 of every 27 has a mini.  I realize this is not 100% accurate information, but it should be fairly good for an estimate.  So using this and what we know about #'s of orders made let's step into a more realistic fantasy:

Jalapenos are on 12/05 ship date and we know that ~14000 orders were made by 12/05
Little Singles are on 09/10 ship date and we know that ~8000 orders were made by 9/10
Singles are on 6/30 ship date and we know ~2700 orders were made by 6/30
Minirigs are on 7/21 ship date for 1/3 and we know ~3700 orders were made by 7/21

This gives us an estimated 10k Jalapenos, 2k littie Singles, 1.5k Singles and 140 minis.

10K * 5 = 10TH... 2k * 30 = 60TH... 1.5k * 60 = 90TH... 140 * 500 (only 1/3 has shipped) = 70TH...

50TH of jala + 60TH of LS + 90TH of Singles + 70TH of minis gives you 270TH.  That looks a lot like our missing amount of network increase.

Coincidence? You decide.

[BR0KK]

This thread was an interesting read, a lot of opinion and lot of mud slinging, a crapton of outright lies and a fair amount of truth.

Since most of this thread is "he said/she said" or completely made up shit to cause trolling let's start off with FACTS, and these are VERIFIABLE FACTS.

1) BFL is shipping product - FACT.
2) Different product lines are shipping at different rates and are at different paid dates - FACT
3) BFL has had over 72,000 orders placed - FACT.

Sure, some orders have been cancelled, some refunds have been paid, but there's no number here.  We can acknowledge it happened, but not to what extent.

Let's step into fantasy a second... (For this I will be using some infor from http://bfl.ptz.ro/ to back up my points)  Let's pretend there are 72,000 total orders, that every order was for 1 item, that no refunds have been made and go from there.  We know as fact BFL is shipping Jalapenos that were paid for on Dec 5, 2012.  ~14000 orders were made by Dec 5th, 14/72 = almost 20% of Jalapenos ordered have been shipped (this IS still fantasy remember).  LS are listed at Sept 10.  ~8000 orders were made by Sept 10, 8/72 = 11.11%.  Singles are up to June 30th, ~2700 orders were made by June 30, so 2.7/72 = 3.75% and lastly we have Minirigs at pay date July 21, ~3700 orders had been made by 7/21, 3.7/72 = 5.1%.  I think it's safe to say this numbers are pure fantasy and makes it look like BFL needs another year to catch up.

Let's step into a different fantasy, but with some thought put into it.  It's June 2012, people are using FPGAs and GPUs, Network hash is about 12TH and people running 10GH are making over 6BTC a day.  They've invested 10's of thousands of dollars into their GPUs and are seeing $800-$900 a month in returns.  Mid June an announcement is made... ASIC preorders will open up on June 23rd.  The money spent on a 10GH GPU farm would buy almost 400GH of ASICs.  June 23rd rolls around, pre-orders open up and in less than a day 2000 people have placed orders.  Investors hoping to have the 1st units buy 20-50 units.  GPU farmers buy 5-10 apiece.  The average joe buys 1-2.  Lots os variable here, but let's pretend the average 1st day order is for 15 units of something.  Since it's still fantasy we'll say the remaining 70,000 orders were for 1 unit each.  Gives us some nice round numbers.  2k*15 + 70K*1 = 100k total units.  Let's look again at Jalapenos... Dec 5 is ~14,000 orders, but instead of 20% of the way through the order book, we're now at 42%!!  The Sept 10 orders of LS' with ~8000 now is 36% of orders!!!  The 2700 orders by June 30th make singles at 30.7%!!! and those ~3700 orders by July 21 = 31.7%...... wait.... only 1/3 or mini's have shipped... 10.6%   Still, Jalapenos will be completed in under a month,  LS and Singles may take 3 months and MINIs may take 4-5 months.  BUT!  THEY HAVEN"T RAMPED UP PRODUCTION YET!!!!!!!!!!!!!!!!!!!!!!!!

Ahh, I love that fantasy, it makes me all warm inside.

How about we try for something that MAY be fantasy but is a hellova lot closer to the truth.

We need some facts again...

1) Between Avalon and ASICMiner it is estimated they have added 160-180TH to the network.  Let's call it 180.
2) Current Network hash as seen http://blockchain.info/stats has been between 450TH and 500TH during the 8 hours I've looked at it today.  We'll say 450.
3) There's 270TH of missing network hash out there.

Where has this come from? 

Let's go back to http://bfl.ptz.ro/ a second. Using the 4951 orders listed on the site as a reference along with the 3575 Jalas, 1230 LS', 2678 Singles and 185 minis listed on it, we can infer on average 2 of every 3 orders has a jalapeno. 1 of every 4 has an LS, 5 out of every 9 has a single and 1 of every 27 has a mini.  I realize this is not 100% accurate information, but it should be fairly good for an estimate.  So using this and what we know about #'s of orders made let's step into a more realistic fantasy:

Jalapenos are on 12/05 ship date and we know that ~14000 orders were made by 12/05
Little Singles are on 09/10 ship date and we know that ~8000 orders were made by 9/10
Singles are on 6/30 ship date and we know ~2700 orders were made by 6/30
Minirigs are on 7/21 ship date for 1/3 and we know ~3700 orders were made by 7/21

This gives us an estimated 10k Jalapenos, 2k littie Singles, 1.5k Singles and 140 minis.

10K * 5 = 10TH... 2k * 30 = 60TH... 1.5k * 60 = 90TH... 140 * 500 (only 1/3 has shipped) = 70TH...

50TH of jala + 60TH of LS + 90TH of Singles + 70TH of minis gives you 270TH.  That looks a lot like our missing amount of network increase.

Coincidence? You decide.

What about the still operating gpu and fpga rigs. I think the last time i checked their hashpower was arround 20 to 35 Th combined (i could be wrong here).

[bcp19]

How about we try for something that MAY be fantasy but is a hellova lot closer to the truth.

We need some facts again...

1) Between Avalon and ASICMiner it is estimated they have added 160-180TH to the network.  Let's call it 180.
2) Current Network hash as seen http://blockchain.info/stats has been between 450TH and 500TH during the 8 hours I've looked at it today.  We'll say 450.
3) There's 270TH of missing network hash out there.

Where has this come from? 

Let's go back to http://bfl.ptz.ro/ a second. Using the 4951 orders listed on the site as a reference along with the 3575 Jalas, 1230 LS', 2678 Singles and 185 minis listed on it, we can infer on average 2 of every 3 orders has a jalapeno. 1 of every 4 has an LS, 5 out of every 9 has a single and 1 of every 27 has a mini.  I realize this is not 100% accurate information, but it should be fairly good for an estimate.  So using this and what we know about #'s of orders made let's step into a more realistic fantasy:

Jalapenos are on 12/05 ship date and we know that ~14000 orders were made by 12/05
Little Singles are on 09/10 ship date and we know that ~8000 orders were made by 9/10
Singles are on 6/30 ship date and we know ~2700 orders were made by 6/30
Minirigs are on 7/21 ship date for 1/3 and we know ~3700 orders were made by 7/21

This gives us an estimated 10k Jalapenos, 2k littie Singles, 1.5k Singles and 140 minis.

10K * 5 = 10TH... 2k * 30 = 60TH... 1.5k * 60 = 90TH... 140 * 500 (only 1/3 has shipped) = 70TH...

50TH of jala + 60TH of LS + 90TH of Singles + 70TH of minis gives you 270TH.  That looks a lot like our missing amount of network increase.

Coincidence? You decide.

What about the still operating gpu and fpga rigs. I think the last time i checked their hashpower was arround 20 to 35 Th combined (i could be wrong here).

As I highlighted above.....

[Viceroy]

Omg look at this:

http://www.butterflylabs.com/monarch/

They are gearing up for their next pre-order scam!

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Look at that bullshit picture.  It's like an M C Escher mobious strip... that fan is 2d in a 3d form!

They are not even trying anymore. 

[Rassah]

Look at that bullshit picture.  It's like an M C Escher mobious strip... that fan is 2d in a 3d form!

They are not even trying anymore. 

Um, what are you talking about? That's a standard centrifugal blower fan. They're pretty standard on GPUs.