back to article FTC nails pin in Bitcoin mining rig maker Butterfly Labs

The US Federal Trade Commission has shut down Bitcoin mining equipment vendor Butterfly Labs over allegations that the company accepted as much as $50m in orders from customers but failed to deliver their purchases. Butterfly purported to sell dedicated Bitcoin mining machines, with its more powerful models carrying price tags …

  1. Anonymous Coward
    Anonymous Coward

    Wolf, wolf I say!!

    "For its part, Butterfly claims it was in the process of fulfilling its remaining orders and processing requested refunds when the FTC unilaterally shut it down"

    The FTC was in the wrong because [you] couldn't fulfill orders placed, and paid for, for product within two YEARS?

    Ah, the wolf-cries of the fraudster. We all shed a tear for thee.

    1. ewozza

      Re: Wolf, wolf I say!!

      At least Butterfly won't be lonely in the dock - Bitcoin kit suppliers are notorious for ahem "underperformance".

      1. Cliff

        Re: Wolf, wolf I say!!

        During the gold rush it was the shovel sellers who got rich. These guys would have just told you to use your hands whilst they attached the metal bit to the wooden bit, and to come back in a couple of months...

        1. AbelSoul

          Re: Wolf, wolf I say!!

          During the gold rush it was the shovel sellers who got rich. These guys would have just told you to use your hands whilst they attached the metal bit to the wooden bit, and to come back in a couple of months...

          But we still need your money up front....

      2. Anonymous Coward
        Anonymous Coward

        Bitcoin kit suppliers are notorious for ahem "underperformance".

        Their kit performs just fine, usually as good as they say.

        The problem is the kit finds it very hard to leave the building as it's generating far more money for the company sitting on the 'test bench' than it would for filling it's order value.

        Once the kit is obsolete they may/may not bother putting it in a box and shipping it out the door.

        Not the the Bitcoin world is jammed full of fraudsters, thieves and lowlife criminals or anything.

  2. Ole Juul

    Opportunists

    I'm basically pro Bitcoin and anti FTC, but Butterfly Labs is just weakening Bitcoin and strengthening the FTC. Opportunists like this just screw things up for everybody.

  3. Sureo

    More than one way to mine a bitcoin

    "Butterfly had taken in "at least $20 million, and potentially up to $50 million" in cold, hard US currency"

    Butterfly's own mining operation appears to have paid off handsomely.

  4. razorfishsl

    BFL = lying scumbags, they flatly refused to refund my money and were nearly 1 year late with the shit they shipped in the end.

    Mind you their CEO was a convicted fellon and money launderer, who operated the business with the full backing of the parole officer, despite it being a criminal offense for him to hold the position he did.

    1. Robert Helpmann??
      Childcatcher

      Is that Victor Lustig?

      BFL = lying scumbags, they flatly refused to refund my money and were nearly 1 year late with the shit they shipped in the end.

      They were basically selling a money machine - put in a 10 and get back two 20s. It's been done plenty of times in the past for great profit, though not by the marks, so it's a good model for con artists to follow. I am sorry you were had, though.

  5. Anonymous Coward
    Anonymous Coward

    Libertarians turn to civil authorities again for redress

    Isn't that against the lolbertarian creed?

    1. h4rm0ny

      Re: Libertarians turn to civil authorities again for redress

      I don't see anything in the article about "Libertarians", just customers who have been ripped off.

  6. Anonymous Coward
    Anonymous Coward

    What about the company MinersBox, also known as MinersCube ? Are they fraud too ? Pre-order month keep on changing, and no email response, no announcement to buyers as to status of any (20nm 15 tera hash/sec) pre-order machines !

    Even if pre-order hardware are delivered, because of delay, significant portion of buying cost will be un-recoverable, as "difficulty" level always rising around 12% every 2 weeks or so. So any Bitcoin mining amount potential is also going down 12% every 2 weeks, approximately.

  7. Dan Paul

    Is it that difficult...

    to buy the parts and build your own Bitcoining machines? Building a PC is tinkertoys these days.

    All they are is a high spec PC that has massive multiple video cards.

    http://www.maximumpc.com/bitcoin_mining_101

    The high end ASUS or Gigabyte motherboards support at least three sometimes four 3 gigabyte video cards in crossfire or sli configuration. Add some liquid cooling, overclock it, etc

    You can get the software free from SourceForge.

    1. kphair
      Mushroom

      Re: Is it that difficult...

      No, they are custom-built ASICs in a chassis; Not even GPUs have the grunt needed these days to mine bitcoins profitably*. Even when looking into their kit a year ago, it was obvious from looking at the publicly posted waiting list that the only people who were getting up-to-date gear which could actually mine whole coins were the review sites, everybody else had to wait in line.

      Their business model was effectively a pyramid scheme. The money from customers was being used to develop the next generation of ASICs rather than fulfil orders. It was only a matter of time before their luck ran out.

      Icon chosen because the whole bitcoin mining industry is not much different to a nuclear arms race, with the only winners being the arms suppliers - If they can get out in time!

      * Mining other cryptocoins with GPUs is a different story, but Bitcoin is one of those where ASICs are so far ahead of the game that it's pointless for anything other than research, but then you might as well do it on paper! http://www.righto.com/2014/09/mining-bitcoin-with-pencil-and-paper.html

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