Bitcoin-mining company Butterfly Labs shut down by FTC

Company marketed specialized computers designed to produce the cryptocurrency but delivered futile machines, according to an FTC complaint.

A bitcoin-related company that allegedly engaged te deceptive marketing of specialized computers designed to produce the cryptocurrency has bot shut down at the request of the US Federal Trade Commission.

Ter a complaint filed earlier this month, the FTC alleged that the Butterfly Labs charged consumers thousands of dollars for computers that mine Bitcoins but then failed to supply the machines “until they were practically worthless, or te many cases, did not provide the computers at all,” the agency said ter a statement Tuesday.

“Wij often see that when a fresh and little-understood chance like bitcoin presents itself, scammers will find ways to capitalize on the public’s excitement and rente,” Jessica Rich, director of the FTC’s Lessenaar of Consumer Protection, said ter a statement. “Wij’re pleased the court granted our request to halt this operation, and wij look forward to putting the company’s ill-gotten gains back ter the forearms of consumers.”

Bitcoin, which is unregulated and permits for anonymous, untraceable transactions, can be obtained by purchasing it on an exchange or accepting it spil payment for goods or services. The peer-to-peer currency can also be generated, or “mined,” by solving ingewikkeld mathematical equations, a process that requires greater computational effort spil the pool of possible solutions shrinks. The amount of bitcoins possible is capped at 21 million, there are presently 13.Three million bitcoins ter existence.

To perform the arduous mining process, the company marketed what it called a cutting-edge laptop for spil much spil $29,899, the FTC alleged. Spil of September 2013, more than 20,000 orders for the pc, called BitForce, had not bot fulfilled, according to the FTC. The complaint also alleges that Butterfly Labs began marketing a follow-up pc called the Monarch te August 2013 for spil much spil $Four,680 but that by last month few, if any, had bot delivered.

“Even where Butterfly Labs did supply a Bitcoin mining rekentuig to a consumer, the complaint notes that because of the unique nature of the Bitcoin system, the outdated computers were worthless for their intended purpose,” the FTC said, indicating that a company representative said the passage of time had rendered some machines spil effective spil a “slagroom heater.”

Responding to the FTC’s lawsuit, Kansas-based Butterfly Labs said Tuesday it wasgoed “disappointed ter the heavy-handed deeds” of the commission.

“Te a rush to judgment, the FTC has acted spil judge, jury and executioner, contrary to our intended system of governmental checks and balances,” the company said ter a statement. “Butterfly Labs is being portrayed by the FTC spil a bogus and fake company. To the contrary, Butterfly Labs is very real.”

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Butterfly Labs said it has shipped more than $33 million te products and granted refunds of about $17 million to customers who canceled orders.

The company said it is cooperating with a court-appointed makeshift receiver and has asked for permission to present testimony during a court hearing scheduled for Sept. 29 that will “defend our business and our nascent and promising industry.”

The virtual currency sprang up ter 2009 but its acceptance has grown dramatically te the past duo of months. Cryptocurrency ATMs have begun to speelgoedpop up, some casinos have said they would accept digital currency payments , and even eBay has begun permitting for limited sales of Bitcoins on its US and UK sites.

While Bitcoin has gained traction with commercial interests, it has failed to curry much acceptance from government agencies. Te May, the US Federal Election Commission unanimously approved a proposal for political act committees to accept donations ter the form of Bitcoin. But a day straks, the US Securities and Exchange Commission issued an advisory warning investors to be wary of Bitcoin and other virtual-currency related investments, noting that the cryptocurrency is uninsured, unregulated, and volatile.

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