{BFL} U.S. Court halts Bitcoin mining operation Butterfly Labs/Josh/Inaba - FTC

[LittleD]

https://uk.finance.yahoo.com/news/u-court-halts-bitcoin-mining-182124522.html

Deceptive Marketing Tricks
Related ContentBitcoin (virtual currency) coins are seen in an illustration picture taken at La Maison du Bitcoin in Paris July 11, 2014. REUTERS/Benoit Tessier /FilesView PhotoBitcoin (virtual currency) coins are seen in an illustration picture taken at La Maison du Bitcoin in …

By Ros Krasny

WASHINGTON (Reuters) - A U.S. court has temporarily shut down Butterfly Labs, a Missouri company the Federal Trade Commission alleges deceptively marketed computers designed to produce bitcoins, the "virtual currency" payment system.

The FTC's complaint against Butterfly and its corporate officers alleges that the company charged consumers thousands of dollars for its bitcoin computers, called BitForce, but then failed to ship the computers until they were almost obsolete, or in many cases did not provide the computers at all.

In an emailed statement on Tuesday, Butterfly Labs said the commission had overreached with "heavy-handed actions."

“In a rush to judgment, the FTC has acted as judge, jury and executioner, contrary to our intended system of governmental checks and balances," the company said. "It appears the FTC has decided to go to war on bitcoin overall, and is starting with Butterfly Labs."

Unlike traditional currency, bitcoins are not distributed by a central bank or backed by physical assets like gold, but are “mined” by users who use computers to calculate increasingly complex algorithmic formulas.

When a user solves a formula, the bitcoin system awards that user a set number of bitcoins. As time passes and more bitcoins are mined, mining becomes more difficult. The codes become more complex and require more powerful computers to solve them.

“We often see that when a new and little-understood opportunity like Bitcoin presents itself, scammers will find ways to capitalize on the public’s excitement and interest,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said on Tuesday.

Butterfly sold its computers from $149 to $29,899 based on the machines' purported computing power. The FTC said that more than 20,000 consumers had not received the computers they purchased as of September 2013.

A more powerful computer, the Monarch, was launched in August 2013 for sale between $2,499 and $4,680, but few of the machines had been delivered, the FTC said.

"Butterfly Labs was literally in the midst of shipping out completed products to fulfill the remaining millions of dollars of orders on our books and issuing requested refunds," the company said.

The defendants in the case are BF Labs, Inc, doing business as Butterfly Labs, and company officers Darla Drake, Nasser Ghoseiri and Sonny Vlesides, the FTC said.

The court's preliminary ban on Butterfly Labs will be considered at a hearing scheduled for Monday.

The case is 4:14-cv-00815-BCW in U.S. District Court for the Western District of Missouri.


(Reporting by Ros Krasny; Editing by Peter Cooney)

https://uk.finance.yahoo.com/news/u-court-halts-bitcoin-mining-182124522.html

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[awesome31312]

already a thread

but thanks for the details

[jjc326]

I'd love a report from the hearing.

Also, from BFL's statements, it sounds like they are TRYING to get all of the Bitcoin community to line up behind them and help them out, claiming it's an attack on Bitcoin.  But it's not, it's just an attack on a scam company.

[gogxmagog]

Meh.

They get their doors padlocked, accounts frozen, fined, ordered to make restitution. They will declare bankruptcy, the coins are already hidden, there's nothing to take! The bfl team does a few months of white collar time at club fed. Disappear to Belize with millions in btc intact. Pretty good for a few months cushy jail time.

God bless America!

[LittleD]

I'd love a report from the hearing.

Also, from BFL's statements, it sounds like they are TRYING to get all of the Bitcoin community to line up behind them and help them out, claiming it's an attack on Bitcoin.  But it's not, it's just an attack on a scam company.

I totally agree, BFL is Attacking the bitcoin community ...

[LittleD]

the BFL crew will be going to jail in two weeks.

[gogxmagog]

I'd love a report from the hearing.

Also, from BFL's statements, it sounds like they are TRYING to get all of the Bitcoin community to line up behind them and help them out, claiming it's an attack on Bitcoin.  But it's not, it's just an attack on a scam company.

Do you have a link to josh statement? I need to hear what that weasel comes up with. Usually beyond belief (quite literally)

EDIT- please stop saying that they will go to jail in two weeks. The logic of the joke is that two weeks equals much longer, possibly forever, so it should be "bfl josh is going to jail FOR two weeks"

Thank you

[LittleD]

I'd love a report from the hearing.

Also, from BFL's statements, it sounds like they are TRYING to get all of the Bitcoin community to line up behind them and help them out, claiming it's an attack on Bitcoin.  But it's not, it's just an attack on a scam company.

Do you have a link to josh statement? I need to hear what that weasel comes up with. Usually beyond belief (quite literally)

EDIT- please stop saying that they will go to jail in two weeks. The logic of the joke is that two weeks equals much longer, possibly forever, so it should be "bfl josh is going to jail FOR two weeks"

Thank you

+1
I was looking for it cant find it

[franky1]

butterfly labs statement that it is a rush to judgement is crap..

if i remember rightly the FTC or another government department gave BFL a warning a couple months ago, to clear up their act. and i guess BFL's time is now up.
they had their chance to do the right thing, so i do not pitty BFL one bit.

refunds could all be done in a single day. products (if they exist) could be shipped within a month. but this goes to show that if a company offer a product that exceeds one month shipment.. DONT CALL IT A PRE-ORDER! DON'T TAKE PEOPLES MONEY.

id advise everyone who still has an order with BFL to send an email requesting refunds. where the dollar price tag of product is repaid in bitcoin at todays LOW price.

EG
if you pre ordered $10k of equipment in december (=9btc). now request a $10k refund in bitcoin at todays rate (=26btc)

[LittleD]

id advise everyone who still has an order with BFL to send an email requesting refunds. where the dollar price tag of product is repaid in bitcoin at todays LOW price.

EG
if you pre ordered $10k of equipment in december (=9btc). now request a $10k refund in bitcoin at todays rate (=28btc)

+1 Please do so!:)

[LFC_Bitcoin]

Will this have an effect on the BTC price?

[knight22]

Will this have an effect on the BTC price?

Yes, this is good news.

[LittleD]

Looks like the article has been updated with a little more info:

UPDATE 11:17am CT: Helen Wong, an FTC attorney, told Ars that all three principals had been served with the lawsuit and that no arrests were made. The USMS, she said, was present to "keep the peace."
Initially, she explained, the case was sealed to prevent BFL from moving money around (or, in government parlance, to prevent "asset dissipation").
BFL is no longer in the hands of its principals but rather under a temporary court-appointed "receiver," a situation which will last until Monday, September 29. On that date, the judge can choose to extend the receivership or cancel it.
"The court granted the FTC's request to put the company under a temporary receivership," Wong said. "Basically everything is under the control of the receivership. The order allows us to locate documents and assets. The receiver has temporary custody of the company; everything is under his ownership until or unless the court decides otherwise."
Wong also noted that in this action—the FTC's first involving Bitcoin—seeks "full consumer redress," which, if successful, would result in refunds payable in US dollars.

http://www.ftc.gov/news-events/press-releases/2014/09/ftcs-request-court-halts-bogus-bitcoin-mining-operation

[rapta]

It was only a matter of time.  I wonder if any other vendors will have similar problems?

[zorke]

Looks like the article has been updated with a little more info:

UPDATE 11:17am CT: Helen Wong, an FTC attorney, told Ars that all three principals had been served with the lawsuit and that no arrests were made. The USMS, she said, was present to "keep the peace."
Initially, she explained, the case was sealed to prevent BFL from moving money around (or, in government parlance, to prevent "asset dissipation").
BFL is no longer in the hands of its principals but rather under a temporary court-appointed "receiver," a situation which will last until Monday, September 29. On that date, the judge can choose to extend the receivership or cancel it.
"The court granted the FTC's request to put the company under a temporary receivership," Wong said. "Basically everything is under the control of the receivership. The order allows us to locate documents and assets. The receiver has temporary custody of the company; everything is under his ownership until or unless the court decides otherwise."
Wong also noted that in this action—the FTC's first involving Bitcoin—seeks "full consumer redress," which, if successful, would result in refunds payable in US dollars.

I would be curious if this had anything to do with the recent selloff of the price of bitcoin recently. I would speculate that BFL had a good stash of bitcoin from mining with customer machines (prior to shipping the machines) and they could have sold them in reaction to this lawsuit. Unlike their bank assets the FTC could not effectively take control of the bitcoin that was held by BFL

[LittleD]

on BFL website they have an email and phone number to an attorney Can some one please check it out and let us know why???
http://butterflylabs.com/
eljreceiver@spencerfane.com
spencerfane.com
816-292-8316

[LittleD]

These are the idiots representing BFL and Josh... Ha! Josh is about to get scammed by real professionals scammers HAHAHAH!



http://www.spencerfane.com/

[mercistheman]

Yeah it has always been speculation that BFL was mining with customers money ("the monarchs work just not reliable right now").... I'm sure it was easy for them to move btc around well b4 investigations began... somebody's brother in law is sitting on a large pile right now.

[Come-In-Behind]

I only have 1 word to say.

Op's name is LittleD, LMFAO, he has a little d!!

[ChuckBuck]

I only have 1 word to say.

Op's name is LittleD, LMFAO, he has a little d!!

Very insightful comment.  What the heck does that have to do with BFL?