Bitcoin burrower biz Butterfly Labs billed $38m for 'bilking' buyers

Butterfly Labs has been told to cough up $38.6m after it was accused of taking orders for Bitcoin mining machines and – rather than shipping the equipment – using the gear to generate piles of cyrptocurrency for itself. The Kansas-based biz offered computer hardware optimized for mining BTC, and charged up to $30,000 for the …

[goldcd]

Well Duh!

So, say you've made a machine that can "create money" - do you create your own money, or sell them to others for less than they're worth to you?

[Anonymous Coward]

Wait!

No one's looking for the $50M?? Write a check for $4,000 and walk away? Damn, I'm in the wrong business.

[Jim-234]

So as I understand it, they stole $50 million from their customers.

Make a deal with the authorities to give the authorities up to $38 million (if it's ever found)

authorities say nothing will be refunded to the victims?????

So basically $50 million was stolen and the crooks get to keep 12 Million, the government gets whatever it can find up to 38 million and the victims get nothing!!!!!

Sounds kind of like a bit of a shady deal especially seeing as the authorities were supposedly acting because of the "victims", way too brazenly self serving if you ask me.

[Doctor Syntax]

I think it's time to reintroduce a Victorian institution: the debtors' prison.

[I. Aproveofitspendingonspecificprojects]

> I think it's time to reintroduce a Victorian institution: the debtors' prison.

That's what I was thinking too but don't the potential data miners belong in prisons too. or isn't datamining a criminal offence for fun-emun-e.

[redpawn]

Too much ill gotten gains

I have a machine which turns clay into gold. I'm tired of selling the gold on the black market so I'm looking for scrupulous buyers for my machine who promise not to flood the market with gold and crash the market as I still have substantial gold reserves. I'm only asking $50,000 per machine which can produce 10 ounces per month. Due to back orders there may be some delay in delivery.

[frank ly]

Re: Too much ill gotten gains

Will you take payment in Frankcoin?

[jake]

::heh::

Yet another reason to champion BTC, apparently ... Specifically, "a fool and his money are soon parted" ... if you are a purveyor of BTC kit, of course ;-)

[Paul Smith]

More basic questions...

It is claimed that this company took in $50m of orders for bit coin mining machines that it used itself rather then ship.

a) How many bit coins would $50m of hardware generate,

b) where are the bitcoins that were generated?

[sisk]

Math

So they took $50m in orders, used the machines to generate BitCoin, presumably a mountain of BitCoin with $50m worth of ASICs to throw at it, and settled out of court for $38m. So out of this scam they may $12m in profit plus whatever BitCoin they managed to squeeze out of the machines they were supposed to be shipping. And the we're supposed to believe they're broke? Yeah, not buying it.

Then again when it comes to BFL I never bought it, so, you know....

[Anonymous Coward]

using the gear to generate piles of cyber-currency for itself.

Can they pay the out-of-court settlement in Bitcoin?

[Cynic_999]

I seriously considered buying one of their rigs a couple of years ago, but then did the maths and realised how long it would take to break even, even assuming bitcoin held its value (it didn't), the mining did not become significantly more difficult (it did), and the cost of electricity would not increase (which it has). Now it looks like I would not even have received the rig, so that's one decision I'm not regretting.

I joined a mining pool using my GPU for a few weeks until I realised it was generating far less income in bitcoin than it was consuming in kWh.

[BumblingIdiot]

Shovels in a Gold Rush.

We've all heard the phrase "In a gold rush the people selling the shovels are the ones that make the real money" or words to that effect. But isn't this is more akin to selling someone the shovel, bashing them over the head with it and then keeping both the money and the shovel?

In any case, I do have a lot of sympathy for the customers. Being sold a load of old tat by a del-boy-esque character is one thing. Taking someones money and then keeping (and using) the goods seems more akin to theft than a trading standards dispute (in my humble opinion.)

ParisHiltonCoin only from now on.