Alternative Finances

FTC Cracks Down On “Bogus” Bitcoin Operation


The U.S. Federal Trade Commission (FTC) convinced a federal court to shut down a Missouri-based Bitcoin company called Butterfly Labs because, according to the FTC complaint, the company “charged consumers thousands of dollars for its Bitcoin computers, but then failed to provide the computers until they were practically useless or, in many cases, did not provide the computers at all.”

“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,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “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.”

The FTC also said that Butterfly Labs offered a service last year where consumers would pay for computing time to access Bitcoins. “By August 2014, Butterfly Labs had not provided any Bitcoin mining services to consumers, despite some having paid thousands of dollars for the services,” the complaint said.

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