Company Closed Following Bitcoin Scandal - FTC Lead Fight Against Alleged Bitcoin Mining Machines

A company has been shut down by a federal court following a request made by the Federal Trade Commission.

The company, Missouri-based Butterfly Labs, is accused of selling computers to thousands of consumers but failing to deliver the goods. The FTC, in a press release, alleges more than 20,000 people had not received their computer by September 2013 despite paying for the machines, in full, when they were marketed a year earlier.

Butterfly Labs, the commission stated, marketed the computers as machines designed to produce Bitcoins, a payment system sometimes referred to as “virtual currency.” However, after consumers paid between $149 to $29,899 for the machines, many customers had not received their computer.

“We often see that when a new and little-understood opportunity like Bitcoin presents itself, scammers will find ways to capitalize on the public’s excitement and interest,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in the press release.

“We’re pleased the court granted our request to halt this operation, and we look forward to putting the company’s ill-gotten gains back in the hands of consumers.”

Bitcoins, an Internet currency, aren’t distributed through banks. Instead, the virtual currency is ‘mined’ by users who use computers to calculate complex algorithmic formulas. Once a formula is solved, a number of Bitcoins are awarded. The more Bitcoins mined the more difficult the formulas become.

Butterfly Labs, the FTC claims, cashed in on this system by advertising the computers that could solve complex formulas and, therefore, reward owners with more Bitcoins.

The court’s order in the case requires the defendants to immediately stop making misrepresentations about their products and services, and places a freeze on their assets.

Post from: SiteProNews: Webmaster News & Resources

Company Closed Following Bitcoin Scandal

W. Brice McVicar is a staff writer for SiteProNews.

The post Company Closed Following Bitcoin Scandal appeared first on SiteProNews.