FTC Settles Case Against Bitcoin Operator Butterfly Labs
Bitcoin mining operation Butterfly Labs reached agreement with the FTC to settle the agency's case against the company, the commission said Thursday. The FTC sued Butterfly in the U.S. Court of Appeals in Kansas City, Missouri, claiming the company was…
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misleading its customers by delaying or failing to deliver bitcoin mining computers (see report in the Sept. 24, 2014, issue). Butterfly and two of its operators -- General Manager Darla Drake and Vice President-Product Development Sonny Vleisides -- will be prohibited as part of the settlement from “misrepresenting to consumers whether a product or service can be used to generate Bitcoins or any other virtual currency, on what date a consumer will receive the product or service, and whether the product is new or used,” the FTC said in a news release. Butterfly and Vleisides are also barred from taking upfront payments for Bitcoin machines or other machines used to mine virtual currency unless those products are available and can be delivered within 30 days, the FTC said. Butterfly agreed to pay $15,000 of a suspended $38,615,161 settlement against the company and Vleisides, while Vleisides agreed to pay $4,000. Drake will surrender the cash value of all Bitcoins she obtained using Butterfly's machines in exchange for a suspension of a $135,878 judgment against her. The FTC agreed to suspend the monetary judgments because of the defendants' inability to pay, but said those judgments will take effect if the FTC finds Butterfly and others “misrepresented their financial condition.” The Kansas City district court will need to approve the FTC's settlement for it to take effect.