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Author Topic: Bryan Micon's Butterfly Labs Scammer Investigation including Josh Zerlan  (Read 99241 times)
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January 15, 2013, 01:00:13 PM
 #41

The Manual:
https://bitcointalk.org/index.php?topic=136615.0
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January 15, 2013, 03:47:56 PM
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BFL as of Dec was already in violation of a FTC rule, They did not send out the required options notices and everyone who did not get one should call the FTC and complain plain and simple. The FTC will fine them for everyone one of these Notices they did not comply with.

The website in the FAQ still had delivery date listed as NOV, they have since changed that since I posted a post Similar in another thread. That means as of DEC 2012 If you did not get a notice from BFL they broke the FTC rules.

Sample Fine
http://news.cnet.com/FTC-fines-e-tailers-1.5-million-for-shipping-delays/2100-1017_3-243684.html

I called this shit long ago... But I was trolling lol I contacted the Attorney General, but at the request of some members I did not pursue action. I think some of you need to pick up the phone and make a quick call it only takes about 5 mins.

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Selling on the Internet: Prompt Delivery Rules
The Internet is the fastest growing source of mail order sales. It's estimated that consumers spent $200 billion on Internet-based goods and services in 2008. The explosive growth in the goods and services sold online has in the past, taken many online sellers by surprise: demand has outpaced supply, depleting inventories and disappointing customers. The Federal Trade Commission is advising online merchants to review their obligations under the Mail or Telephone Order Merchandise Rule to better serve their customers.

The Rule spells out the ground rules for making promises about shipments, notifying consumers about unexpected delays, and refunding consumers' money. Enforced by the FTC, the Mail or Telephone Order Rule applies to orders placed by phone, fax or the Internet. Your compliance can have bottom line benefits for your company - that is, satisfied customers are repeat customers.

Complying With The Rule

By law, you must have a reasonable basis for stating that a product can be shipped within a certain time. If your advertising doesn't clearly and prominently state the shipment period, you must have a reasonable basis for believing that you can ship within 30 days.

If you can't ship within the promised time (or within 30 days if you made no promise), you must notify the customer of the delay, provide a revised shipment date and explain his right to cancel and get a full and prompt refund.

For definite delays of up to 30 days, you may treat the customer's silence as agreeing to the delay. But for longer or indefinite delays - and second and subsequent delays - you must get the customer's written, electronic or verbal consent to the delay. If the customer doesn't give you his okay, you must promptly refund all the money the customer paid you without being asked by the customer.

Finally, you have the right to cancel orders that you can't fill in a timely manner, but you must promptly notify the customer of your decision and make a prompt refund.

Running Late? Overwhelmed with Orders?

The Rule gives you several ways to deal with an unexpected demand.

You can change your shipment promises up to the point the consumer places the order, if you reasonably believe that you can ship by the new date. The updated information overrides previous promises and reduces your need to send delay notices. Be sure to tell your customer the new shipment date before you take the order.
You must provide a delay option notice if you can't ship within the originally promised time. The Rule lets you use a variety of ways to provide the notice, including e-mail, fax or phone. It's a good idea to keep a record of what your notice states, when you provide it, and the customer's response.
Your Opportunity to Comment

The National Small Business Ombudsman and 10 Regional Fairness Boards collect comments from small businesses about federal compliance and enforcement activities. Each year, the Ombudsman evaluates the conduct of these activities and rates each agency’s responsiveness to small businesses. Small businesses can comment to the Ombudsman without fear of reprisal. To comment, call toll-free 1-888-REGFAIR (1-888-734-3247) or go to www.sba.gov/ombudsman.

For More Information

Contact the FTC’s Consumer Response Center for the complete Business Guide to the Mail or Telephone Order Merchandise Rule and Advertising and Marketing on the Internet: Rules of the Road.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

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January 15, 2013, 08:42:18 PM
 #43

When there is no actual product and no prototypes accepting orders is an "investment" not a purchase. It is basically a no interest loan especially if they use the funds to finance their production process. In this case yes the SEC does prosecute investment scams, because thats what it is.

Exactly.  BFL appears to be crowdfunding without being straightforward about it, much less compliant with the numerous applicable regulations.


https://forums.butterflylabs.com/bfl-forum-miscellaneous/690-13-jan-2013-asic-update-discussion-thread-5.html#post10399

Quote from: JoshZerlan
Another delay we've had to endure is the fact that we have effectively tied the ASIC teams payment to the success of the chip. If the chip were to be a failure they don't get paid... so they have incentive to get it right but that has made them very cautious and slow to approve final masks (This is why we can refund all pre-orders we want and why we have the capital to do what we need to do without a failure putting us in bankruptcy).

Seems to me like BFL is using pre-order money to fund ongoing R&D & pay Josh Zerlan + other BFL employee salaries.  It seems like they have shot some of that pre-order $$$ at China and China has not shot back ASIC chips.  Who knows where the fail could be in such a complex machine. 

I wonder if they keep gambling:  maybe they send more of the pre-order money at a different Chinese manufacturer that promises that can produce the chips, all the while using the huge pre-order bankroll for operations and weekly salaries.

Apparently some of the funds are also used to buy CES booths with fan-boxes as a show of corporate strength, with instruction to cuss at anyone asking the tough questions: http://youtu.be/UlWrmIqGs3Y?t=2m38s

I'm flying FPV race drones these days. Check out my YouTube channel: https://www.youtube.com/c/MiconFPV
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January 15, 2013, 08:47:09 PM
 #44

When there is no actual product and no prototypes accepting orders is an "investment" not a purchase. It is basically a no interest loan especially if they use the funds to finance their production process. In this case yes the SEC does prosecute investment scams, because thats what it is.

Exactly.  BFL appears to be crowdfunding without being straightforward about it, much less compliant with the numerous applicable regulations.


https://forums.butterflylabs.com/bfl-forum-miscellaneous/690-13-jan-2013-asic-update-discussion-thread-5.html#post10399

Quote from: JoshZerlan
Another delay we've had to endure is the fact that we have effectively tied the ASIC teams payment to the success of the chip. If the chip were to be a failure they don't get paid... so they have incentive to get it right but that has made them very cautious and slow to approve final masks (This is why we can refund all pre-orders we want and why we have the capital to do what we need to do without a failure putting us in bankruptcy).

Seems to me like BFL is using pre-order money to fund ongoing R&D & pay Josh Zerlan + other BFL employee salaries.  It seems like they have shot some of that pre-order $$$ at China and China has not shot back ASIC chips.  Who knows where the fail could be in such a complex machine. 

I wonder if they keep gambling:  maybe they send more of the pre-order money at a different Chinese manufacturer that promises that can produce the chips, all the while using the huge pre-order bankroll for operations and weekly salaries.

Apparently some of the funds are also used to buy CES booths with fan-boxes as a show of corporate strength, with instruction to cuss at anyone asking the tough questions: http://youtu.be/UlWrmIqGs3Y?t=2m38s

What are you talking about?

Quote
We have all of our parts needed to build the units in stock, with the exception of the chips. We have taken delivery of all of our Chinese made components at this time and they are filling up our warehouse and the assembly plant warehouse. Our fab is not located in China and our chips will be done before CNY in any event. Our packaging plant is located in California and obviously not affected by CNY, our assembly house is located in the US and thus also not affected.

Sorry for my bad english Wink
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January 15, 2013, 08:52:46 PM
 #45

Hi Bryan.

I am also a poker player, albeit an amateur, but I do have a couple cashes at WSOP and WSOPc. I have read several poker books which go over tells pretty extensively. It is easy for BFL to lie in forum posts and announcements/press releases, however when they do it face to face, they cannot hide involuntary responses the body has while lying. After reading your post and watching your video, I started looking around for articles/videos of BFL at CES.

I found this video interesting: http://www.youtube.com/watch?v=5ZUPniBo5UQ

If you fast forward to 4:25, you will see the camera man ask Josh a tough question... something along the lines of "Now this is just a case, you don't actually have ASICs ready?" At this moment Josh gives off several visual tells.

First, he is blinking quickly, which is an involuntary reaction to bluffing (if you don't play poker, bluffing means lying). Now I went back through the rest of the video and he actually blinks a lot more often than a normal person, so as you know Bryan, this tell cannot be given much credence.

Secondly, Josh looked down and to the left at least three times while answering the tough question of "so.. this is just a box of fans?" and saying his product will ship soon. This was the most obvious tell for me that he was lying and already knew about a delay that hadn't been announced or are not shipping products at all. This is the most telling of his visual tells and the one that really made me think he was lying.

After watching this video I do not trust BFL or Josh at all. Good luck on your effort to prove BFL is a scam. I for one am happy to have got a refund so now I don't need to worry about my money being in BFL's pockets.

1)  This is a very, very good analysis of body language, and I stand by what I say, not just because you are backing up my point in this thread.  The above words demonstrate knowledge in reading people in any situation, not just poker.  Clearly you have done your homework.  Navarro ftw?  are you as nostalgic as me and re-read the Mike Caro tell book once in a while for funzies?

2)  I watched that video [ comments disabled btw ] and full agree.  I catch many "negative confidence tells" here.  A classic "looking down-left" occurs and is quickly corrected at the 4:41 mark, I have started the video a few seconds earlier to hear the interviewer as the question: http://youtu.be/5ZUPniBo5UQ?t=4m38s

I'm flying FPV race drones these days. Check out my YouTube channel: https://www.youtube.com/c/MiconFPV
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January 15, 2013, 08:55:37 PM
 #46

When there is no actual product and no prototypes accepting orders is an "investment" not a purchase. It is basically a no interest loan especially if they use the funds to finance their production process. In this case yes the SEC does prosecute investment scams, because thats what it is.

Exactly.  BFL appears to be crowdfunding without being straightforward about it, much less compliant with the numerous applicable regulations.


https://forums.butterflylabs.com/bfl-forum-miscellaneous/690-13-jan-2013-asic-update-discussion-thread-5.html#post10399

Quote from: JoshZerlan
Another delay we've had to endure is the fact that we have effectively tied the ASIC teams payment to the success of the chip. If the chip were to be a failure they don't get paid... so they have incentive to get it right but that has made them very cautious and slow to approve final masks (This is why we can refund all pre-orders we want and why we have the capital to do what we need to do without a failure putting us in bankruptcy).

Seems to me like BFL is using pre-order money to fund ongoing R&D & pay Josh Zerlan + other BFL employee salaries.  It seems like they have shot some of that pre-order $$$ at China and China has not shot back ASIC chips.  Who knows where the fail could be in such a complex machine. 

I wonder if they keep gambling:  maybe they send more of the pre-order money at a different Chinese manufacturer that promises that can produce the chips, all the while using the huge pre-order bankroll for operations and weekly salaries.

Apparently some of the funds are also used to buy CES booths with fan-boxes as a show of corporate strength, with instruction to cuss at anyone asking the tough questions: http://youtu.be/UlWrmIqGs3Y?t=2m38s
From what Josh said, they are only using the pre-order money IF the chips work.  Otherwise, the engineers don't get paid.  Josh never said anything about paying anyone with pre-order money yet - in fact, he says "This is why we can refund all pre-orders we want".  How do you get that they are shooting pre-order money left and right when that is exactly the opposite of what Josh said?
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January 15, 2013, 08:55:47 PM
 #47

When there is no actual product and no prototypes accepting orders is an "investment" not a purchase. It is basically a no interest loan especially if they use the funds to finance their production process. In this case yes the SEC does prosecute investment scams, because thats what it is.

Exactly.  BFL appears to be crowdfunding without being straightforward about it, much less compliant with the numerous applicable regulations.


https://forums.butterflylabs.com/bfl-forum-miscellaneous/690-13-jan-2013-asic-update-discussion-thread-5.html#post10399

Quote from: JoshZerlan
Another delay we've had to endure is the fact that we have effectively tied the ASIC teams payment to the success of the chip. If the chip were to be a failure they don't get paid... so they have incentive to get it right but that has made them very cautious and slow to approve final masks (This is why we can refund all pre-orders we want and why we have the capital to do what we need to do without a failure putting us in bankruptcy).

Seems to me like BFL is using pre-order money to fund ongoing R&D & pay Josh Zerlan + other BFL employee salaries.  It seems like they have shot some of that pre-order $$$ at China and China has not shot back ASIC chips.  Who knows where the fail could be in such a complex machine. 

I wonder if they keep gambling:  maybe they send more of the pre-order money at a different Chinese manufacturer that promises that can produce the chips, all the while using the huge pre-order bankroll for operations and weekly salaries.

Apparently some of the funds are also used to buy CES booths with fan-boxes as a show of corporate strength, with instruction to cuss at anyone asking the tough questions: http://youtu.be/UlWrmIqGs3Y?t=2m38s

What are you talking about?

Quote
We have all of our parts needed to build the units in stock, with the exception of the chips. We have taken delivery of all of our Chinese made components at this time and they are filling up our warehouse and the assembly plant warehouse. Our fab is not located in China and our chips will be done before CNY in any event. Our packaging plant is located in California and obviously not affected by CNY, our assembly house is located in the US and thus also not affected.

The location of the factory that BFL contracted to make ASIC chips is not relevant to the discussion.  In fact, what country is doing the producing of these chips again?  I have only begun my initial research, this thread is serving as just that - Bryan Micon's research into Butterfly Labs.  I appologize if small, irrelevant errors are made along the way.  They will be corrected as quickly possible for accuracy.

I'm flying FPV race drones these days. Check out my YouTube channel: https://www.youtube.com/c/MiconFPV
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January 15, 2013, 08:58:42 PM
 #48

When there is no actual product and no prototypes accepting orders is an "investment" not a purchase. It is basically a no interest loan especially if they use the funds to finance their production process. In this case yes the SEC does prosecute investment scams, because thats what it is.

Exactly.  BFL appears to be crowdfunding without being straightforward about it, much less compliant with the numerous applicable regulations.


https://forums.butterflylabs.com/bfl-forum-miscellaneous/690-13-jan-2013-asic-update-discussion-thread-5.html#post10399

Quote from: JoshZerlan
Another delay we've had to endure is the fact that we have effectively tied the ASIC teams payment to the success of the chip. If the chip were to be a failure they don't get paid... so they have incentive to get it right but that has made them very cautious and slow to approve final masks (This is why we can refund all pre-orders we want and why we have the capital to do what we need to do without a failure putting us in bankruptcy).

Seems to me like BFL is using pre-order money to fund ongoing R&D & pay Josh Zerlan + other BFL employee salaries.  It seems like they have shot some of that pre-order $$$ at China and China has not shot back ASIC chips.  Who knows where the fail could be in such a complex machine. 

I wonder if they keep gambling:  maybe they send more of the pre-order money at a different Chinese manufacturer that promises that can produce the chips, all the while using the huge pre-order bankroll for operations and weekly salaries.

Apparently some of the funds are also used to buy CES booths with fan-boxes as a show of corporate strength, with instruction to cuss at anyone asking the tough questions: http://youtu.be/UlWrmIqGs3Y?t=2m38s
From what Josh said, they are only using the pre-order money IF the chips work.  Otherwise, the engineers don't get paid.  Josh never said anything about paying anyone with pre-order money yet - in fact, he says "This is why we can refund all pre-orders we want".  How do you get that they are shooting pre-order money left and right when that is exactly the opposite of what Josh said?

Here is another thing that Josh said:  http://youtu.be/UlWrmIqGs3Y?t=2m38s  It involves cussing at me and handing me a quarter when I ask the start of what he knows would have been a very tough line of questioning from a skeptic.   I wouldn't place too much stock in what this man says.  Think about it logically:  What chip maker would ever agree to such terms?  Don't pay us *anything* until we show you a working ASIC that no one else has made yet?

I'm flying FPV race drones these days. Check out my YouTube channel: https://www.youtube.com/c/MiconFPV
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January 15, 2013, 09:00:04 PM
 #49

BFL as of Dec was already in violation of a FTC rule, They did not send out the required options notices and everyone who did not get one should call the FTC and complain plain and simple. The FTC will fine them for everyone one of these Notices they did not comply with.

The website in the FAQ still had delivery date listed as NOV, they have since changed that since I posted a post Similar in another thread. That means as of DEC 2012 If you did not get a notice from BFL they broke the FTC rules.

Sample Fine
http://news.cnet.com/FTC-fines-e-tailers-1.5-million-for-shipping-delays/2100-1017_3-243684.html


You may be right, you may be wrong.....

But I fail to see why an order holder would complain to the FTC and risk the company they have money with being fined.  It is probably not in their interest to file a complaint at this time.

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January 15, 2013, 09:03:16 PM
 #50

When there is no actual product and no prototypes accepting orders is an "investment" not a purchase. It is basically a no interest loan especially if they use the funds to finance their production process. In this case yes the SEC does prosecute investment scams, because thats what it is.

Exactly.  BFL appears to be crowdfunding without being straightforward about it, much less compliant with the numerous applicable regulations.


https://forums.butterflylabs.com/bfl-forum-miscellaneous/690-13-jan-2013-asic-update-discussion-thread-5.html#post10399

Quote from: JoshZerlan
Another delay we've had to endure is the fact that we have effectively tied the ASIC teams payment to the success of the chip. If the chip were to be a failure they don't get paid... so they have incentive to get it right but that has made them very cautious and slow to approve final masks (This is why we can refund all pre-orders we want and why we have the capital to do what we need to do without a failure putting us in bankruptcy).

Seems to me like BFL is using pre-order money to fund ongoing R&D & pay Josh Zerlan + other BFL employee salaries.  It seems like they have shot some of that pre-order $$$ at China and China has not shot back ASIC chips.  Who knows where the fail could be in such a complex machine. 

I wonder if they keep gambling:  maybe they send more of the pre-order money at a different Chinese manufacturer that promises that can produce the chips, all the while using the huge pre-order bankroll for operations and weekly salaries.

Apparently some of the funds are also used to buy CES booths with fan-boxes as a show of corporate strength, with instruction to cuss at anyone asking the tough questions: http://youtu.be/UlWrmIqGs3Y?t=2m38s
From what Josh said, they are only using the pre-order money IF the chips work.  Otherwise, the engineers don't get paid.  Josh never said anything about paying anyone with pre-order money yet - in fact, he says "This is why we can refund all pre-orders we want".  How do you get that they are shooting pre-order money left and right when that is exactly the opposite of what Josh said?

Here is another thing that Josh said:  http://youtu.be/UlWrmIqGs3Y?t=2m38s  It involves cussing at me and handing me a quarter when I ask the start of what he knows would have been a very tough line of questioning from a skeptic.   I wouldn't place too much stock in what this man says.  Think about it logically:  What chip maker would ever agree to such terms?  Don't pay us *anything* until we show you a working ASIC that no one else has made yet?
Based on what you had done the day before, I am not surprised.

There are plenty of payment arrangements based on performance.  If a chip maker has experience in custom ASICs, and believes that they can produce the product, then they very well may accept such an arrangement.
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January 15, 2013, 09:15:15 PM
 #51

When there is no actual product and no prototypes accepting orders is an "investment" not a purchase. It is basically a no interest loan especially if they use the funds to finance their production process. In this case yes the SEC does prosecute investment scams, because thats what it is.

Exactly.  BFL appears to be crowdfunding without being straightforward about it, much less compliant with the numerous applicable regulations.


https://forums.butterflylabs.com/bfl-forum-miscellaneous/690-13-jan-2013-asic-update-discussion-thread-5.html#post10399

Quote from: JoshZerlan
Another delay we've had to endure is the fact that we have effectively tied the ASIC teams payment to the success of the chip. If the chip were to be a failure they don't get paid... so they have incentive to get it right but that has made them very cautious and slow to approve final masks (This is why we can refund all pre-orders we want and why we have the capital to do what we need to do without a failure putting us in bankruptcy).

Seems to me like BFL is using pre-order money to fund ongoing R&D & pay Josh Zerlan + other BFL employee salaries.  It seems like they have shot some of that pre-order $$$ at China and China has not shot back ASIC chips.  Who knows where the fail could be in such a complex machine. 

I wonder if they keep gambling:  maybe they send more of the pre-order money at a different Chinese manufacturer that promises that can produce the chips, all the while using the huge pre-order bankroll for operations and weekly salaries.

Apparently some of the funds are also used to buy CES booths with fan-boxes as a show of corporate strength, with instruction to cuss at anyone asking the tough questions: http://youtu.be/UlWrmIqGs3Y?t=2m38s

What are you talking about?

Quote
We have all of our parts needed to build the units in stock, with the exception of the chips. We have taken delivery of all of our Chinese made components at this time and they are filling up our warehouse and the assembly plant warehouse. Our fab is not located in China and our chips will be done before CNY in any event. Our packaging plant is located in California and obviously not affected by CNY, our assembly house is located in the US and thus also not affected.

The location of the factory that BFL contracted to make ASIC chips is not relevant to the discussion.  In fact, what country is doing the producing of these chips again?  I have only begun my initial research, this thread is serving as just that - Bryan Micon's research into Butterfly Labs.  I appologize if small, irrelevant errors are made along the way.  They will be corrected as quickly possible for accuracy.

so ... everything is a scam, but the statements about the manufacture of the chips is acceptable. Interesting

Sorry for my bad english Wink
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January 15, 2013, 09:28:43 PM
 #52

When there is no actual product and no prototypes accepting orders is an "investment" not a purchase. It is basically a no interest loan especially if they use the funds to finance their production process. In this case yes the SEC does prosecute investment scams, because thats what it is.

Exactly.  BFL appears to be crowdfunding without being straightforward about it, much less compliant with the numerous applicable regulations.


https://forums.butterflylabs.com/bfl-forum-miscellaneous/690-13-jan-2013-asic-update-discussion-thread-5.html#post10399

Quote from: JoshZerlan
Another delay we've had to endure is the fact that we have effectively tied the ASIC teams payment to the success of the chip. If the chip were to be a failure they don't get paid... so they have incentive to get it right but that has made them very cautious and slow to approve final masks (This is why we can refund all pre-orders we want and why we have the capital to do what we need to do without a failure putting us in bankruptcy).

Seems to me like BFL is using pre-order money to fund ongoing R&D & pay Josh Zerlan + other BFL employee salaries.  It seems like they have shot some of that pre-order $$$ at China and China has not shot back ASIC chips.  Who knows where the fail could be in such a complex machine. 

I wonder if they keep gambling:  maybe they send more of the pre-order money at a different Chinese manufacturer that promises that can produce the chips, all the while using the huge pre-order bankroll for operations and weekly salaries.

Apparently some of the funds are also used to buy CES booths with fan-boxes as a show of corporate strength, with instruction to cuss at anyone asking the tough questions: http://youtu.be/UlWrmIqGs3Y?t=2m38s
From what Josh said, they are only using the pre-order money IF the chips work.  Otherwise, the engineers don't get paid.  Josh never said anything about paying anyone with pre-order money yet - in fact, he says "This is why we can refund all pre-orders we want".  How do you get that they are shooting pre-order money left and right when that is exactly the opposite of what Josh said?

Here is another thing that Josh said:  http://youtu.be/UlWrmIqGs3Y?t=2m38s  It involves cussing at me and handing me a quarter when I ask the start of what he knows would have been a very tough line of questioning from a skeptic.   I wouldn't place too much stock in what this man says.  Think about it logically:  What chip maker would ever agree to such terms?  Don't pay us *anything* until we show you a working ASIC that no one else has made yet?
Based on what you had done the day before, I am not surprised.

There are plenty of payment arrangements based on performance.  If a chip maker has experience in custom ASICs, and believes that they can produce the product, then they very well may accept such an arrangement.

If you have no personal knowledge of "what I did the day before" then please read this post that pretty much shut down BFL's weak excuses for Josh Zerlan acting in such an unprofessional manner:  https://bitcointalk.org/index.php?topic=133487.msg1452374#msg1452374

which is worth a full repost in this thread, as that was the first BFL defense mechanism for explaining why their empolyee would talk to a known skeptic in such a way.  I am also adding this to the OP for full context of when watching the video:

This is to the best I can remember.  I wasn't recording anything day 1, wasn't planning on anything but sneaking into CES to shake some BTC hands as I always do when BTC companies buy booths in Vegas for conventions.

Quote from: micon
1)  About "sneaking in" to CES:  I always "sneak in" to all conventions I want to go to here in Vegas.  I wear my WSOP media badge from a few years ago and just walk in like a boss.  Sure I could call whatever bitcoin-facing booth is there and have them give me a badge for the ~30 minutes I'll be there.  As will all conferences, the booth buyers usually need to pay extra for another badge, or at the very least pull a "hey let me use your badge and then I walk out with 2 badges and give one to you"   - I "sneak in" because it is +EV for everyone involved.  Next time, if ever, BFL comes to the conference I will acquire a legitimate badge as it was clear they called security to have me removed. 

2)  About the "stomping and cussing" on day 1 that Josh keeps referring to.  First off, Josh was not there day 1.  Only Dave was in the booth representing BFL.  I imagine Josh was off doing Yoga or other form of meditation & self-reflection.  We will get to that in a second.  Let's start at the beginning:

3)  Whenever a bitcoin booth at any conference comes to Vegas, I go to say hi, shake a hand, say "hey, I'm Micon.  I help Freemoney run SealsWithClubs, the market leading bitcoin online poker site."  And just see who is there and what they want to talk about, trade bitcoin ideas for ~20-30 minutes then be on my way.  I have done this many times and met a bunch of BTC industry leaders.  Erik Voorhees I met this way and he is an amazingly awesome human, and Charlie Shrem I met I think at the same Money2020 conference maybe 6 months ago or so at Aria, and I had Charlie on my donkdown podcast for an awesome interview about the bitinstant operation based in New York.  I was skeptical about parts of bitinstant and bitpay at the start, but when I asked the company directors of those organizations I was met with clear answers and follow up interviews.

4) Ok so I was on the same grind on day 1 CES - just go and meet the boys again, shake some hands, congratulate bitpay on the round of funding, etc.  My daughter was born ~ 2 weeks ago but I made time before picking my parents up at the airport to stop by CES to do this because I feel it is very important, + I'm a huge nerd and CES is nerd porn.  Right after the nerd porn convention they have a real porn convention here but that's not the point of this story.  When I found the Bitpay booth,  I didn't realize they would be sharing a booth with BFL, in fact I was very excited to see BFL equipment on display and I planned on asking some extremely nerdy questions about how the hardware will solve the proof-of-work problem much, much faster than current equipment.  I also wanted to understand the metrics of what ASIC will do to the network hash rate, as I understand mining conceptually but not technically.

5) Dave immediately engaged me when I walked near the BFL equipment.  I congratulated him on selling a large amount of pre-orders.  he said in a smug way "yeah... we've done very well"  To a studied poker professional such as myself, his body language gave me the impression that this man felt by collecting the pre-order monies he has already done well.   If I were in his shoes, the first thing I would have said was "We have a huge responsibility to get these things shipped ASAP.  The community has handed us a large amount of money"   I would feel like the weight of the world was on my shoulders to make good on the massively distributed promise of sending these machines.  Dave felt like a winner, IMO.

6)  I asked very plainly "is this your ASICs" or something to that effect.  This is when it got predatory.  He showed me the box of fans + 1 android tablet and said that is where ASIC chips will eventually go, and the android device will be the output screen to show you how fast it's mining and other stats.  I asked what the cube connected to a second android sitting on top of the fan-box was, and Dave said it's an FPGA miner that BFL used to sell, but it wasn't currently mining and you can't buy it from BFL anymore.  I asked Dave what items were available for purchase right now from BFL that they could ship immediately, he said there were none.  I then asked when they would ship ASICs, he said "in a couple of weeks," and showed me 3 cases that ASIC chips would come inside.

7)  After it was clear I was no longer a friendly and was asking some tough questions, he hit me with a classic scammer line something to the effect of "if you don't believe in BFL, then you don't believe in bitcoin."  This is where the "stomping and profanity" as Josh put it came in.  Please don't take Josh's or My word for it - Ask the bitpay guys about this next part - I give a very intelligent response to Dave, certainly using profanity for emphasis (but not in the personally derogatory way that Josh Zerlan does to me here: http://www.youtube.com/watch?v=UlWrmIqGs3Y&feature=youtu.be&t=2m43s ) more like "I believe so much in bitcoin that I wear this fucking button (point to bitcoin button I always wear when leaving the house for any reason) each day, and help run the market leading bitcoin online poker site, dedicating most of my awake time to the betterment of this technology."  Ask the bitpay guys.  I was certainly pissed off, and this guy used a classic scammer line on me and IMO it required a forceful response so Dave understands that I'm a real guy with real BTC credentials, and his line is bullshit and +1's in my head that he and his company are dishonest.

  After my response, emotions briefly settled, and I asked him when filled with ASICs how fast this machine would hash at.  He said something like 1+ T-hashes per second.  I.e. 1000 ghashes/s , would produce in terms of Dave did not know network hashrate.  I told him it wasn't a test, just tell me about how many T-hashes/s the network hash rate was.  Dave said he still didn't know, so I quickly looked it up on my Galaxy Note II by Samsung running Android Jellybean OS by removing the S-pen and quickly speaking into google "total bitcoin network hashrate"   This site came up: http://bitcoin.sipa.be/  and to me it looks like the current total bitcoin network hashrate is around 20-25 Thash/s - which means that if Dave was right, just one of these boxes could have ~ 6% of total current network hashing power.   I was surprised he had never run the math before...

9) so after this, I post the pic I took and illustrated that BFL did not bring anything worthwhile to CES.  I posted on bitcointalk that I'd be back tomorrow to film closely and ask the tough questions.  Obviously we all saw Josh Zerlan's response: http://www.youtube.com/watch?v=UlWrmIqGs3Y&feature=youtu.be&t=2m43s


If there is anything that needs clarification please ask.  I am 100% transparent.  I further state that it is possible I have made a small chronological or grammatical error of some sort.  I feel I captured the general feel of the day 1 CES experience as it relates to BFL.

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January 15, 2013, 10:24:49 PM
 #53

Interview with Josh. He explains everything. You don't have a reason to worry!

Subtitles: on.

http://www.youtube.com/watch?feature=player_embedded&v=C4SnUObMd0o

ROFL FUNNY SHIT!

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January 15, 2013, 10:26:19 PM
 #54

Hi Bryan.

I am also a poker player, albeit an amateur, but I do have a couple cashes at WSOP and WSOPc. I have read several poker books which go over tells pretty extensively. It is easy for BFL to lie in forum posts and announcements/press releases, however when they do it face to face, they cannot hide involuntary responses the body has while lying. After reading your post and watching your video, I started looking around for articles/videos of BFL at CES.

I found this video interesting: http://www.youtube.com/watch?v=5ZUPniBo5UQ

If you fast forward to 4:25, you will see the camera man ask Josh a tough question... something along the lines of "Now this is just a case, you don't actually have ASICs ready?" At this moment Josh gives off several visual tells.

First, he is blinking quickly, which is an involuntary reaction to bluffing (if you don't play poker, bluffing means lying). Now I went back through the rest of the video and he actually blinks a lot more often than a normal person, so as you know Bryan, this tell cannot be given much credence.

Secondly, Josh looked down and to the left at least three times while answering the tough question of "so.. this is just a box of fans?" and saying his product will ship soon. This was the most obvious tell for me that he was lying and already knew about a delay that hadn't been announced or are not shipping products at all. This is the most telling of his visual tells and the one that really made me think he was lying.

After watching this video I do not trust BFL or Josh at all. Good luck on your effort to prove BFL is a scam. I for one am happy to have got a refund so now I don't need to worry about my money being in BFL's pockets.

LOL comments for this video have been disabled!

That is TELLING! ROFL!

http://www.youtube.com/watch?v=5ZUPniBo5UQ

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January 15, 2013, 10:27:06 PM
 #55

Micon - I'll gladly take you up on a 1:1 bet that BFL will deliver.  I'd put down 20 BTC that BFL will deliver an ASIC miner by the end of 2013.

That is a pretty easy bet. End of 2013? LOL...how about end of February?

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January 16, 2013, 12:32:05 AM
 #56

A very telling video of Josh Zerlan explaining to a reporter at CES 2013 who started with the softballs and towards the end got to the tough questions.  Pay special attention to Josh Zerlan's eyes looking down-left at the 4:41 mark - it is a great lesson in "low confidence tells" and I suggest Joe Navarro's entire body of work if you'd like to high and low confidence body language better, not just for beating-poker reasons.

This video starts a few seconds before the question is answered by Josh Zerlan but watch carefull at the 4:41 mark for his down-left eye movement

http://youtu.be/5ZUPniBo5UQ?t=4m29s

shout to CoinHoarder for first noticing Josh's low-confidence tells in this video.




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January 16, 2013, 12:51:09 AM
 #57

A very telling video of Josh Zerlan explaining to a reporter at CES 2013 who started with the softballs and towards the end got to the tough questions.  Pay special attention to Josh Zerlan's eyes looking down-left at the 4:41 mark - it is a great lesson in "low confidence tells" and I suggest Joe Navarro's entire body of work if you'd like to high and low confidence body language better, not just for beating-poker reasons.

This video starts a few seconds before the question is answered by Josh Zerlan but watch carefull at the 4:41 mark for his down-left eye movement

http://youtu.be/5ZUPniBo5UQ?t=4m29s

shout to CoinHoarder for first noticing Josh's low-confidence tells in this video.

I respect what you are trying to do here in that there are in fact outstanding issues with BFL. But can you please tell us what part of this is a real tangible issue and what part of this is you saying Josh would regret what he said to you? I mean, from the video you posted I can tell you don't like the guy and "thats how you roll" -- going after someone with a vengeance -- but it tends to cloud the real issues here. Can you please stop your personal vindictive campaign and come up with some actual evidence? The FCC rule violation is a great start, but this poker-tell stuff is pretty lame. Yes, it may warrant a second look but a second look at what? Are you really going to sit here for the next month babbling about poker tells? I sure hope you're right because your coming down a little hard on a company that has a proven track record of actually delivering. Just based on that alone if I was the one running a scam investigation into BFL I'd stick to the facts and be a little plainer about what I had against the company personally.
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January 16, 2013, 01:08:31 AM
 #58

from here [screenshot saved & timestamped in case this is edited / deleted by Josh Zerlan or otherwise BFL]:

https://forums.butterflylabs.com/announcements/692-bfl-asic-status.html#post10249


Quote from: Josh Zerlan
Here is the currently estimated timeline, and while this is subject to change of course, it's pretty solid at this time:


Week of January 13th
Travel to packaging facility for final prep and walkthrough
Confirm travel plans and trip details with lead ASIC engineer for trip to fab

Week of January 20th
Final assembly facility prep
Leave for fab at the end of the week

Week of January 26th
Final chips roll off the line
Grab suitcase, a BMW or a Peugeot and make a break for the airport, Ronin style (You can see Tom about 6 minutes, 20 seconds into the video)
Arrive California at chip packaging plant
KC facility starts assembly process of units to drop PCB into

Week of February 3rd
Chips packaged
Packaged chips sent to assembly house
Assembled PCB is set for final testing and MCU programming
Notify users to start sending their FPGA units or BTC for trade in participants
Bulk assembled PCBs arrive in KC, we start dropping PCBs into waiting units
Boxing/labeling for shipment

Week of February 10th
We implement the 1/3 shipping plan en mass
1/3 of our assembled units will go to new orders in FIFO
1/3 of our assembled units will go to upgrade orders
1/3 will be randomly selected from both groups

We descend upon the Post Office, DHL, UPS and FedEx like a horde of angry locust


Discussion thread for this update can be found here:

This is a cute way to buy a few more weeks IMO.  

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January 16, 2013, 01:31:01 AM
 #59

But can you please tell us what part of this is a real tangible issue and what part of this is you saying Josh would regret what he said to you? I mean, from the video you posted I can tell you don't like the guy and "thats how you roll" -- going after someone with a vengeance -- but it tends to cloud the real issues here. Can you please stop your personal vindictive campaign and come up with some actual evidence? The FCC rule violation is a great start, but this poker-tell stuff is pretty lame.

I agree 100%. The closest thing to proof of this being a scam I've seen is "he looked nervous." Poker tells don't cut it when it comes to issues like this.

For the record: I don't have any faith in BFL delivering either. But I wouldn't be shouting it into a virtual megaphone on the internet branding it with my name as a conclusive scam report if I didn't have factual and tangible proof to back it up.
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January 16, 2013, 01:35:52 AM
 #60

from here [screenshot saved & timestamped in case this is edited / deleted by Josh Zerlan or otherwise BFL]:

https://forums.butterflylabs.com/announcements/692-bfl-asic-status.html#post10249


Quote from: Josh Zerlan
Here is the currently estimated timeline, and while this is subject to change of course, it's pretty solid at this time:


Week of January 13th
Travel to packaging facility for final prep and walkthrough
Confirm travel plans and trip details with lead ASIC engineer for trip to fab

Week of January 20th
Final assembly facility prep
Leave for fab at the end of the week

Week of January 26th
Final chips roll off the line
Grab suitcase, a BMW or a Peugeot and make a break for the airport, Ronin style (You can see Tom about 6 minutes, 20 seconds into the video)
Arrive California at chip packaging plant
KC facility starts assembly process of units to drop PCB into

Week of February 3rd
Chips packaged
Packaged chips sent to assembly house
Assembled PCB is set for final testing and MCU programming
Notify users to start sending their FPGA units or BTC for trade in participants
Bulk assembled PCBs arrive in KC, we start dropping PCBs into waiting units
Boxing/labeling for shipment

Week of February 10th
We implement the 1/3 shipping plan en mass
1/3 of our assembled units will go to new orders in FIFO
1/3 of our assembled units will go to upgrade orders
1/3 will be randomly selected from both groups

We descend upon the Post Office, DHL, UPS and FedEx like a horde of angry locust


Discussion thread for this update can be found here:

This is a cute way to buy a few more weeks IMO.  

What Josh should do is take a camera and video each part of the timeline as it happens. Then there is accountability to his "estimated" time table.

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