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Topic: Re: Butterfly Labs CEO 25 Million USD Mail Fraud — A Concise Summary of Evidence - page 2. (Read 146776 times)

sr. member
Activity: 476
Merit: 250
If you look at the hashing power and subsequent difficulty increases at the time that BFL started shipping their ASICs, you'd see that their burn testing was insignificant in comparison to the difficulty increase from ASICs actually shipped by them and their competitors. I think they do less than 24 hours of burn testing, on a tiny fraction of the available mining hardware. So I wouldn't get too upset about it.
Also, Josh allows (or used to) for some people to keep their hardware with him and offered them the service of doing the mining for them, instead of shipping the hardware and doing the setup and mining themselves.  I suspect he used his own pool for that purpose. Though I don't really get what the issue is with Josh owning and selling BFL a mining pool.

The term "conflict of interest" mean anything to you?

I don't see the conflict of interest is starting a pool, and selling it to a company you end up working for, or using it as a service for those who don't want to mine in their own homes. Can you elaborate on what the conflict is please?

My friend if you cannot see the conflict of interest on its face, then I cannot help you.
legendary
Activity: 1680
Merit: 1035
If you look at the hashing power and subsequent difficulty increases at the time that BFL started shipping their ASICs, you'd see that their burn testing was insignificant in comparison to the difficulty increase from ASICs actually shipped by them and their competitors. I think they do less than 24 hours of burn testing, on a tiny fraction of the available mining hardware. So I wouldn't get too upset about it.
Also, Josh allows (or used to) for some people to keep their hardware with him and offered them the service of doing the mining for them, instead of shipping the hardware and doing the setup and mining themselves.  I suspect he used his own pool for that purpose. Though I don't really get what the issue is with Josh owning and selling BFL a mining pool.

The term "conflict of interest" mean anything to you?

I don't see the conflict of interest is starting a pool, and selling it to a company you end up working for, or using it as a service for those who don't want to mine in their own homes. Can you elaborate on what the conflict is please?
sr. member
Activity: 476
Merit: 250
If you look at the hashing power and subsequent difficulty increases at the time that BFL started shipping their ASICs, you'd see that their burn testing was insignificant in comparison to the difficulty increase from ASICs actually shipped by them and their competitors. I think they do less than 24 hours of burn testing, on a tiny fraction of the available mining hardware. So I wouldn't get too upset about it.
Also, Josh allows (or used to) for some people to keep their hardware with him and offered them the service of doing the mining for them, instead of shipping the hardware and doing the setup and mining themselves.  I suspect he used his own pool for that purpose. Though I don't really get what the issue is with Josh owning and selling BFL a mining pool.

The term "conflict of interest" mean anything to you?
hero member
Activity: 924
Merit: 1000
If you look at the hashing power and subsequent difficulty increases at the time that BFL started shipping their ASICs, you'd see that their burn testing was insignificant in comparison to the difficulty increase from ASICs actually shipped by them and their competitors. I think they do less than 24 hours of burn testing, on a tiny fraction of the available mining hardware. So I wouldn't get too upset about it.
Also, Josh allows (or used to) for some people to keep their hardware with him and offered them the service of doing the mining for them, instead of shipping the hardware and doing the setup and mining themselves.  I suspect he used his own pool for that purpose. Though I don't really get what the issue is with Josh owning and selling BFL a mining pool.

Let us see what comes out in the discovery. Documented for future reference.
hero member
Activity: 798
Merit: 500
Time is on our side, yes it is!
Wow this is shocking.  Can't believe all this went down..  Kind of thing you almost forget about if you don't take the time to keep up with the events.
legendary
Activity: 1680
Merit: 1035
If you look at the hashing power and subsequent difficulty increases at the time that BFL started shipping their ASICs, you'd see that their burn testing was insignificant in comparison to the difficulty increase from ASICs actually shipped by them and their competitors. I think they do less than 24 hours of burn testing, on a tiny fraction of the available mining hardware. So I wouldn't get too upset about it.
Also, Josh allows (or used to) for some people to keep their hardware with him and offered them the service of doing the mining for them, instead of shipping the hardware and doing the setup and mining themselves.  I suspect he used his own pool for that purpose. Though I don't really get what the issue is with Josh owning and selling BFL a mining pool.
legendary
Activity: 1458
Merit: 1006
@Inaba

I found this bit interesting.  Care to explain?

Quote
One of the noteworthy revelations is that Butterfly Labs acquired a local Kansas-based Bitcoin mining pool, Eclipse Mining Consortium, for $100,000 in 2012. The pool's founder, Josh Zerlan, is now a vice president at BFL. (Zerlan publicly announced that he took a job with BFL in 2012, but he did not mention that he actually sold his company to BFL. Zerlan did not respond to a request for comment for this article.)

Are BFL using your former mining pool to "test" new miners until they are almost totally unprofitable before sending them out?  



To answer your question:


Quote

Re: Butterfly Labs Production of Requested Information

(...)

[to] Kate Mahoney, Assistant United States Attorney

(...)

The following information is submitted on behalf of Sonny Vleisides in response to your inquiry regarding various documents and information related to Butterfly Labs and Sonny Vleisides.

(...)

Eclipse Mining Consortium was a website that Butterfly Labs purchased from Josh Zerlan in 2012.

(...)

Butterfly Labs acquired the IP address and website from Mr. Zerlan for 100,000.

(...)

Butterfly Labs earns mining income from their burn testing of machines

Page 3/7: http://www.scribd.com/doc/217190032/Butterfly-Labs-Production-of-Requested-Information-December-6-2013
sr. member
Activity: 448
Merit: 254
@Inaba

I found this bit interesting.  Care to explain?

Quote
One of the noteworthy revelations is that Butterfly Labs acquired a local Kansas-based Bitcoin mining pool, Eclipse Mining Consortium, for $100,000 in 2012. The pool's founder, Josh Zerlan, is now a vice president at BFL. (Zerlan publicly announced that he took a job with BFL in 2012, but he did not mention that he actually sold his company to BFL. Zerlan did not respond to a request for comment for this article.)

Are BFL using your former mining pool to "test" new miners until they are almost totally unprofitable before sending them out?  

Also you didnt feel the community would be interested to know that rather than just working for them while running your own project on the side you actually sold them your mining pool?

Or did you just not give a fuck about anyone but yourself?

Im awaiting the usual insults and unanswered questions for shits and giggles.  I know no straight reply is coming.

Lastly is it worth looking over your shoulder for the rest of your life knowing that someone you scammed may be out to get you?
legendary
Activity: 1458
Merit: 1006
legendary
Activity: 1458
Merit: 1006
Finally! After weeks and weeks turned into years of fraud and deceit, a fantastic piece of investigative journalism! Cyrus Farivar, you da man!

Digging for answers: The “strong smell” of fraud from one Bitcoin miner maker

A Butterfly Labs exec loses a probation hearing, but details from the case are worse.

Quote
Vleisides’ probation officer, Courtney Pierce, filed a violation report with the Missouri federal judge handling his case (just over two months after Ars published our first articles about Butterfly Labs and its mining machines). In her memo to the judge, Pierce wrote that Vleisides was now an employee of and the dominant shareholder in BFL, a company which "advertises all of its technology for purchase through pre-order... Vleisides did not seek the express approval of the probation officer prior to engaging in a business that involves the solicitation of funds through pre-orders."

She continued:

The Probation Office has been notified by the US Postal Inspection Service that hundreds of complaints have been filed against BFL from individuals who have placed pre-orders for hardware from BFL.

The seriousness of Vleisides' instant offense [the lottery scam], coupled with his current involvement in a somewhat similar business enterprise are cause for concern.

...

Quote
Judge Kays expressed clear reservations about BFL's business and Vleisides' involvement in a company taking so much cash up front. He ordered two supplementary years of supervision for Vleisides, along with a new set of conditions that include regular government access to his "person, his property, house, residence, office, vehicle, papers, computer, other electronic communication or data, storage devices or media, and effects." He said Vleisides must work with Pierce "to communicate, create transparencies. Any loan, especially $64,000 or whatever it is, is something she needs to know about before it's made, no matter [what]."

The judge's most damning comments, however, centered on his overall BFL observations:

"Now, there is a stench coming from Butterfly Labs. It's a strong smell. It's not enough to send you to prison today, because, to be quite honest with you, if it was, we'd be talking about 24 months in prison. It's not—I think it's too close. I think [defense witness] Mr. Bourne did a very good job of testifying, and it assisted your defense greatly. But if I find out that there is this fraud word involved in this part, you know, Mr. Vleisides, as we say here at the courthouse, you need to get your toothbrush and get your things in order, because fraud will not be tolerated, you understand that? So I would work very hard to make these consumers happy consumers who you've dealt with."

More here: http://arstechnica.com/tech-policy/2014/04/digging-for-answers-the-strong-smell-of-fraud-from-one-bitcoin-miner-maker/
hero member
Activity: 924
Merit: 1000
There are still people sending them money.

Funny what hope fraud does to folks.

My $.02.

Wink

FTFY

True enough!

Despite the complainers, it seems that the bigger the scam, the better it works!

My $.02.

Wink

The could have been a billion dollar company... too bad really. Orange jumpers instead of a nice Corneliani suit.

sr. member
Activity: 476
Merit: 250
There are still people sending them money.

Funny what hope fraud does to folks.

My $.02.

Wink

FTFY

True enough!

Despite the complainers, it seems that the bigger the scam, the better it works!

My $.02.

Wink
hero member
Activity: 924
Merit: 1000
There are still people sending them money.

Funny what hope fraud does to folks.

My $.02.

Wink

FTFY
sr. member
Activity: 476
Merit: 250
There are still people sending them money.

Funny what hope does to folks.

My $.02.

Wink
hero member
Activity: 924
Merit: 1000
Don't forget to help others get justice. Tell your story of BFL abuses.

There are 5 million reasons why people should focus on what BFL is doing here to abuse the trust system as well as the FRAUD they have perpetrated. Millions of dollars has been lost to members of our community as a result of BFL malfeasance. Don't forget to get involved and report what has happened to you.
hero member
Activity: 924
Merit: 1000
http://www.woodlaw.com/sites/default/files/casedocs/2014-04-04 Complaint.pdf

Quote
15. Defendant BF Labs, Inc. was formed July 2011. The majority of stock in Defendant was and continues to be held or controlled by Mr. Sonny Vleisides.

16. At the time of the formation of Defendant through the present, Mr. Vleisides was serving a term of supervised release for a felony conviction for Mail Fraud, in violation of 18 U.S.C. § 1341, in the United States District Court for the Central

Quote
37. Defendant has utilized the funds from customer’s pre-payments for:
(a) the paid in full, unfinanced purchase of a residence in Leawood,
Kansas for Mr. Sonny Vleisides;
(b) an automobile for Mr. Sonny Vleisides; and
(c) hundreds of thousands dollars in loans to shareholders of
Defendant.
Posted from Bitcointa.lk - #B9nrIrxfCN9qCMgU

Better late than never. I wonder if criminal charges for mail fraud will follow?

I hope we can all go and watch the sentencing.
vip
Activity: 756
Merit: 503
Quoting the second post of this thread for the historical LULZ:

the CEO of bfl has prooved he delivers (see their fpgas).
i dont care about his history. everybody has a chance to change himself.

i am still looking forward to my - really early ordered - bfl asic Cheesy
legendary
Activity: 1458
Merit: 1006
http://www.woodlaw.com/sites/default/files/casedocs/2014-04-04 Complaint.pdf

Quote
15. Defendant BF Labs, Inc. was formed July 2011. The majority of stock in Defendant was and continues to be held or controlled by Mr. Sonny Vleisides.

16. At the time of the formation of Defendant through the present, Mr. Vleisides was serving a term of supervised release for a felony conviction for Mail Fraud, in violation of 18 U.S.C. § 1341, in the United States District Court for the Central

Quote
37. Defendant has utilized the funds from customer’s pre-payments for:
(a) the paid in full, unfinanced purchase of a residence in Leawood,
Kansas for Mr. Sonny Vleisides;
(b) an automobile for Mr. Sonny Vleisides; and
(c) hundreds of thousands dollars in loans to shareholders of
Defendant.
Posted from Bitcointa.lk - #B9nrIrxfCN9qCMgU

Better late than never. I wonder if criminal charges for mail fraud will follow?
legendary
Activity: 1176
Merit: 1001
http://www.woodlaw.com/sites/default/files/casedocs/2014-04-04 Complaint.pdf

Quote
15. Defendant BF Labs, Inc. was formed July 2011. The majority of stock in Defendant was and continues to be held or controlled by Mr. Sonny Vleisides.

16. At the time of the formation of Defendant through the present, Mr. Vleisides was serving a term of supervised release for a felony conviction for Mail Fraud, in violation of 18 U.S.C. § 1341, in the United States District Court for the Central

Quote
37. Defendant has utilized the funds from customer’s pre-payments for:
(a) the paid in full, unfinanced purchase of a residence in Leawood,
Kansas for Mr. Sonny Vleisides;
(b) an automobile for Mr. Sonny Vleisides; and
(c) hundreds of thousands dollars in loans to shareholders of
Defendant.
Posted from Bitcointa.lk - #B9nrIrxfCN9qCMgU
hero member
Activity: 924
Merit: 501
WOW  Shocked

Had a flashback read of this thread  Cheesy

PG was in his prime back in the day...............so sad  Cry

Sad indeed.  Phin let us all down.  BOO BOO PHIN!
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