Bryan Micon's Butterfly Labs Scammer Investigation including Josh Zerlan

[tbcoin]

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

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?

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.

[Micon]

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

[SgtSpike]

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

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?

[Micon]

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

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?

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.

[Micon]

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

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?

[Littleshop]

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.

[SgtSpike]

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

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.

[tbcoin]

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

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?

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

[Micon]

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

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.

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.

[smoothie]

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!

[smoothie]

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

[smoothie]

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?

[Micon]

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.

[usagi]

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.

[Micon]

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

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.  

[21after2]

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.

[smoothie]

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

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.

[Micon]

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.

Hello, and thanks again for the question.  I understand what you are asking here, something like "Are you just pissed this Josh Zerlan guy insulted you and gave you a quarter, or do you really believe BFL to be a scam"

I have long questioned the legitimacy of BFL.  I don't fire off threads like this lightly, and I think my track record on BTC scams speaks for itself at this point.  BFL is very different than Pirateat40 / BCST in that they have the magical possible business unit, and it is technically extremely complex.  This makes it easier to lie to the community for long periods of time.  BCST was a plain, transparent Ponzi that anyone could spot.  BFL has a history of shipping products that mined bitcoins and has formed a company to my knowledge (some1 plz post the company name and state of incorporation, or link me up as I'm sure this info is already public and posted here) so this is not an easy to spot scam.  The evidence has been mounting over time, so let me explain where I'm at:

1)  BFL bought damn near every single search-based advertisment for "bitcoin" - and I mean they bought ads across every network.  You can't do a search for bitcoin on ask jeeves or bing without hitting a BFL pre-order ad.  This alone is not scary... or is it....  

2)  Those ads cost money.  The only money it appears BFL is spending is on more ads to take more pre-orders.  It's a +EV game for them - they advertise, pay top dollar across every network, hell they even pay users here to make their sigs "buy BFL pre-ordered ASICs"

3)  Missed shipping date after missed shipping date.  Original shipping date:  9/2012  Missed shipping dates cost money.  Something didn't work right.  They didn't get ASICs and I actually believe they tried extremely hard to make them.  I also think based on the other groups trying to make ASIC chips that fabricating these are exceptionally difficult, or they would be to market already and the network hash rate would skyrocket.  

4)  The timeframe now lends itself to months and months of BFL not shipping any product and clearly scrambling, all the while max-spending on advertising to maximize pre-orders.  To me, at this stage, it appears they may be pulling a "Rouge Trader" and trying to gamble their way out of it, i.e. use the pre-order money to fund different sourcing, i.e. buy another batch of chips, pay the same manufacturer or a different one to try and make the ASIC chips again, as clearly the first run didn't work.  

5)  Or maybe they know the writing is on the wall, they are still collecting preorders with no intention to ever ship, pay themselves whatever they can legally from the company, and file a very legal bankrupcy and the scammer CEO that started the company +1's his bank account and the btc community gets boned again.  This is where the real wild speculation comes in.  Further more, I really don't think that BFL started out attempting to become a giant scam.  I do however think their first trials failed misserably, and now they are gambling on R&D with pre-order money.  They could theoretically hit, ship, and I'll look extremely foolish and Josh will look like a boss telling me off and the ASICs are in the mail.   However, I am willing to bet against that possibility.

6)  the personal interactions with Dave & Josh Zerlan set off my scammer radar something fierce.  I smell the largest btc scam in history brewing once again.

[smoothie]

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.

Fact: BFL collected preorders 7 months ago and projected October 2012 delivery.

Fact: BFL is associated with Sonny V., who has a criminal record of mail fraud.

Fact: Delivery of BFL ASICs was pushed back to November, December, January, and now end of February.

Fact: BFL DID NOT bring a working prototype to demo at CES thus proving they don't have a working prototype to showcase their specs the list on their site.

Fact: Josh gave no guarantees that the timeline he posted a few days ago will hold up. (even given all of the 4 months leeway so far)

Fact: Those who have preorders with BFL are biased.

Fact: Josh/Inaba is the worst PR for BFL they could have in place. Who cares if people troll his ass. He is a public figure that represents BFL which tarnishes the name Butterfly Labs.

[21after2]

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.

Fact: BFL collected preorders 7 months ago and projected October 2012 delivery.

Fact: BFL is associated with Sonny V., who has a criminal record of mail fraud.

Fact: Delivery of BFL ASICs was pushed back to November, December, January, and now end of February.

Fact: BFL DID NOT bring a working prototype to demo at CES thus proving they don't have a working prototype to showcase their specs the list on their site.

Fact: Josh gave no guarantees that the timeline he posted a few days ago will hold up. (even given all of the 4 months leeway so far)

Fact: Those who have preorders with BFL are biased.

Fact: Josh/Inaba is the worst PR for BFL they could have in place. Who cares if people troll his ass. He is a public figure that represents BFL which tarnishes the name Butterfly Labs.

Your first four facts are perfectly fine points. The last three are more subjective to me, and they don't necessarily prove anything.