FTC Settles Charges Against Bitcoin Mining Hardware Manufacturer Buttlefly Labs

Bitcoin mining hardware manufacturer Butterfly Labs, has agreed to settle a dispute with the FTC, which accused the company of deceiving customers. According to the FTC’s complaint – which was filed on the 18th of September in 2014 – Butterfly Labs misrepresented the profitability of their mining machines, and also kept customer’s pre-payments without delivering the mining hardware for an extend period of time.

According to an official press release on the FTC website, the settlement bars Butterfly Labs, and its owner Sonny Vleisides, from taking pre-payments for any bitcoin hardware that can not be delivered within 30 days. General manager of Butterfly Labs, Darla Drake, is also under the same constraints.

Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, said that this settlement will ensure that the defendants will not be able to mislead customers in the future.

Under the settlement, Butterfly Labs will also be required to obtain permission from customers in the event of a late delivery.

“Both settlement orders in the case require the defendants to provide consumers with prompt refunds if they sell a damaged or defective product, and require defendants to obtain a consumer’s permission before delivering a product late.”

Although the court imposed monetary penalties of $38,615,161 against Butterfly Labs, the judgements have been suspended for the time being due to the inability of the defendants to pay them. Instead, a $15,000 payment is required of BL, and a $4000 payment is required of Sonny Vleisides.

The $135,8878 judgement against Darla Drake – who used customer’s hardware to mine for herself – will be suspended once she returns the dollar equivalent of all the bitcoins that were mined with that hardware.

While the monetary penalties are suspended for the time being, the FTC has made it clear that the situation may change if any other evidence surfaces.

“The judgments were suspended based on the defendants’ inability to pay, but will become due should the defendants be found to have misrepresented their financial condition.”


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