Topic: Any Updates concerning Butterfly Labs Court Hearing ??? (Read 2604 times)
Thanks for the link; let's hope the judge makes his decision while eating turkey!
There was a court hearing yesterday; any updates?
http://www.coindesk.com/ftc-butterfly-labs-held-back-shipments-illicit-mining/
New court documents filed by the US Federal Trade Commission (FTC) against Butterfly Labs allege that the manufacturer mined bitcoins using customer-purchased equipment prior to shipment.
The documents, filed on 27th September, further allege that Butterfly Labs employees mined bitcoin for personal gain using machines purchased and later returned to the company. The agency says this assertion is supported by the testimony of several former employees.
As a result of the findings, the FTC asked a Kansas City federal judge to impose a preliminary injunction on Butterfly Labs that would extend the temporary restraining order it filed earlier this month. The company will now be controlled by a court-appointed receiver.
The official document reads:
“[Butterfly Labs] misrepresented the delivery and profitability of the BitForce machine, and then made the same misrepresentations to induce consumers to purchase the Monarch, and did so yet again to sell their cloud mining services. They should not get a fourth change (or a fifth chance, in the case of one of the defendants).”
According to the 17-page filing, Butterfly Labs exhibited a “repeated pattern of advertising new and allegedly innovative equipment” and failed repeatedly to deliver on its claims, so closing the company is necessary on these grounds.
The news comes just one week after the manufacturer was shutdown by the US government amid accusations of fraud and public misrepresentation. The FTC was earlier given permission to seize the company’s assets and close its operations pending a formal trial.
Butterfly Labs subsequently alleged that the FTC overreached in its decision to close the company’s operations, suggesting it was in the process of issuing customer refunds – though these refunds would not negate its law violations.
The FTC strongly rebutted these claims in statements to CoinDesk, asserting it acted in the best interests of consumers.
At press time, Butterfly Labs indicated that it would be issuing official comment on the developments later today.
Mining for profit
The FTC alleges that Butterfly Labs was slow to complete the product of its mining units, and that when it did so, it conducted a process known informally as ‘burning in’ wherein equipment was tested and the bitcoins mined as a result were kept for company gain.
One former employee, the FTC said, suggested Butterfly Labs would conduct this process with 500 mining machines operating in three separate ‘burn-in rooms’, meaning as many as 1,500 were in operation in total. Another said that such testing went on for two days – a process that should have taken only 10–30 minutes.
Statements from at least one employee suggest that Butterfly Labs knowingly conducted this process to boost its bottom line. The document reads:
“One employee inquired with company management as to why they chose to test by mining rather than using the test-net, and was told that the company would not make any money using a test-net.”
The FTC claims that no Butterfly Labs customer ever received products on the shipping date originally advertised. In addition, despite the company’s claims that it provided a “full product shipment or refund” to customers who ordered between 9th August and 9th November 2013, Butterfly Labs has not provided supporting evidence to this claim.
Deceptive promotional practices
The FTC went on to suggest that Butterfly Labs used deceptive promotional practices to encourage consumer investment in its products.
According to the agency, defendants also posted a mining return-on-investment (ROI) calculator to the company’s social media profiles, encouraging potential buyers to use the tool to measure the potential profitability of its mining rigs. It dismissed Butterfly Labs’ assertions that it was not responsible for such representations as it did not create the calculator.
Questioning Butterfly Labs’ original estimates about the capabilities of its mining hardware, the release stated:
“A former employee’s declaration asserts that the BitForce Mini-rig had less handing power and consumed more electricity than advertised.”
The FTC also attacked the company’s claims that Butterfly Labs had a “reasonable basis” for the original representations of the estimated delivery dates for their mining rigs.
Further, it suggested that is has firm legal footing to assert that Butterfly Labs could be liable for failing to deliver on its advertisements, citing past precedent.
“The law is well-settled that the FTC need not prove that defendants acted with intent to defraud or in bad faith to prevail,” the statement said.
New court documents filed by the US Federal Trade Commission (FTC) against Butterfly Labs allege that the manufacturer mined bitcoins using customer-purchased equipment prior to shipment.
The documents, filed on 27th September, further allege that Butterfly Labs employees mined bitcoin for personal gain using machines purchased and later returned to the company. The agency says this assertion is supported by the testimony of several former employees.
As a result of the findings, the FTC asked a Kansas City federal judge to impose a preliminary injunction on Butterfly Labs that would extend the temporary restraining order it filed earlier this month. The company will now be controlled by a court-appointed receiver.
The official document reads:
“[Butterfly Labs] misrepresented the delivery and profitability of the BitForce machine, and then made the same misrepresentations to induce consumers to purchase the Monarch, and did so yet again to sell their cloud mining services. They should not get a fourth change (or a fifth chance, in the case of one of the defendants).”
According to the 17-page filing, Butterfly Labs exhibited a “repeated pattern of advertising new and allegedly innovative equipment” and failed repeatedly to deliver on its claims, so closing the company is necessary on these grounds.
The news comes just one week after the manufacturer was shutdown by the US government amid accusations of fraud and public misrepresentation. The FTC was earlier given permission to seize the company’s assets and close its operations pending a formal trial.
Butterfly Labs subsequently alleged that the FTC overreached in its decision to close the company’s operations, suggesting it was in the process of issuing customer refunds – though these refunds would not negate its law violations.
The FTC strongly rebutted these claims in statements to CoinDesk, asserting it acted in the best interests of consumers.
At press time, Butterfly Labs indicated that it would be issuing official comment on the developments later today.
Mining for profit
The FTC alleges that Butterfly Labs was slow to complete the product of its mining units, and that when it did so, it conducted a process known informally as ‘burning in’ wherein equipment was tested and the bitcoins mined as a result were kept for company gain.
One former employee, the FTC said, suggested Butterfly Labs would conduct this process with 500 mining machines operating in three separate ‘burn-in rooms’, meaning as many as 1,500 were in operation in total. Another said that such testing went on for two days – a process that should have taken only 10–30 minutes.
Statements from at least one employee suggest that Butterfly Labs knowingly conducted this process to boost its bottom line. The document reads:
“One employee inquired with company management as to why they chose to test by mining rather than using the test-net, and was told that the company would not make any money using a test-net.”
The FTC claims that no Butterfly Labs customer ever received products on the shipping date originally advertised. In addition, despite the company’s claims that it provided a “full product shipment or refund” to customers who ordered between 9th August and 9th November 2013, Butterfly Labs has not provided supporting evidence to this claim.
Deceptive promotional practices
The FTC went on to suggest that Butterfly Labs used deceptive promotional practices to encourage consumer investment in its products.
According to the agency, defendants also posted a mining return-on-investment (ROI) calculator to the company’s social media profiles, encouraging potential buyers to use the tool to measure the potential profitability of its mining rigs. It dismissed Butterfly Labs’ assertions that it was not responsible for such representations as it did not create the calculator.
Questioning Butterfly Labs’ original estimates about the capabilities of its mining hardware, the release stated:
“A former employee’s declaration asserts that the BitForce Mini-rig had less handing power and consumed more electricity than advertised.”
The FTC also attacked the company’s claims that Butterfly Labs had a “reasonable basis” for the original representations of the estimated delivery dates for their mining rigs.
Further, it suggested that is has firm legal footing to assert that Butterfly Labs could be liable for failing to deliver on its advertisements, citing past precedent.
“The law is well-settled that the FTC need not prove that defendants acted with intent to defraud or in bad faith to prevail,” the statement said.
found something
http://www.kansascity.com/news/business/article2295832.html#/tabPane=tabs-aed136ef-1
A federal judge Monday morning recessed a hearing over control of area bitcoin company Butterfly Labs so attorneys could talk about a plan for it to resume business.
U.S. District Court Judge Brian C. Wimes said in court that a receiver he appointed earlier this month had worked on a plan for the Overland Park company to move forward. Attorneys for both sides praised the plan without referring to any of its details.
“What if we have a plan that’s acceptable that’s a business plan,” Wimes asked the attorneys for both sides.
Wimes then adjourned the hearing and attorneys took up their talks in a small conference room. The discussions later moved outside the court room.
The U.S. Federal Trade Commision had requested a receiver, charging the company had defrauded more than 20,000 consumers for between $20 million and $50 million. The company denied those charges and was in court Monday to regain control.
Butterfly Labs sells computers that buyers can use to earn bitcoin, a virtual currency that lacks government backing but is accepted by its followers in lieu of other government currencies.
During the hearing, talks appeared unlikely after Wimes asked a Butterfly Labs’ attorney why the company was not in discussions with the FTC.
“The FTC called us ‘scammers’ and ‘bogus’. There’s nothing to talk about if that’s their position,” said James Humphrey, who represents the company.
The hearing began with Wimes extending his order that put control of Butterfly Labs under the receiver. The order now runs through Friday.
To reach Mark Davis, call 816-234-4372 or send email to [email protected].
Read more here: http://www.kansascity.com/news/business/article2295832.html#storylink=cpy
http://www.kansascity.com/news/business/article2295832.html#/tabPane=tabs-aed136ef-1
A federal judge Monday morning recessed a hearing over control of area bitcoin company Butterfly Labs so attorneys could talk about a plan for it to resume business.
U.S. District Court Judge Brian C. Wimes said in court that a receiver he appointed earlier this month had worked on a plan for the Overland Park company to move forward. Attorneys for both sides praised the plan without referring to any of its details.
“What if we have a plan that’s acceptable that’s a business plan,” Wimes asked the attorneys for both sides.
Wimes then adjourned the hearing and attorneys took up their talks in a small conference room. The discussions later moved outside the court room.
The U.S. Federal Trade Commision had requested a receiver, charging the company had defrauded more than 20,000 consumers for between $20 million and $50 million. The company denied those charges and was in court Monday to regain control.
Butterfly Labs sells computers that buyers can use to earn bitcoin, a virtual currency that lacks government backing but is accepted by its followers in lieu of other government currencies.
During the hearing, talks appeared unlikely after Wimes asked a Butterfly Labs’ attorney why the company was not in discussions with the FTC.
“The FTC called us ‘scammers’ and ‘bogus’. There’s nothing to talk about if that’s their position,” said James Humphrey, who represents the company.
The hearing began with Wimes extending his order that put control of Butterfly Labs under the receiver. The order now runs through Friday.
To reach Mark Davis, call 816-234-4372 or send email to [email protected].
Read more here: http://www.kansascity.com/news/business/article2295832.html#storylink=cpy
Any Updates concerning Butterfly Labs Hearing... Please let up know 
Thanks
Thanks
Jump to: