The US Federal Trade Commission (FTC) has announced that bitcoin mining hardware company Butterfly Labs and two of its operators have agreed to settle charges that pointed to the company deceiving customers.
The FTC revealed today that bitcoin mining hardware manufacturer Butterfly Labs and two of its operators: part-owner and vice president of product development, Sonny Vleisides and general manager, Darla Drake have settled charges filed against the company.
Under the terms of the settlement, Butterfly Labs must pay the FTC $38,615,161, according to the judgement ordered against the mining hardware firm and its operators. However, that figure will be suspended when the company pays $15,000 while Vleisides pays $4,000.
Additionally, a judgement against the company’s general manager, Jody Drake was put forth at $135,878. The figure will be suspended again, “once she surrenders the cash value of all Bitcoins she obtained using company machines,” the FTC revealed.
In a statement, Jessica Rich, Director of FTC’s Bureau of Consumer Protection said:
Even in the fast-moving world of virtual currencies like Bitcoin, companies can’t deceive people about their products. These settlements will prevent the defendants from misleading consumers.
The judgements were suspended due to the defendants’ inability to pay, the FTC confirmed. The Commission also added that if the defendants have been found of misrepresenting their financial condition, the full amount of over $38 million will become due.
Following the FTC’s revelation of the settlement, Butterfly Labs released a statement that claimed:
BFC continues to believe that the FTC case has no merit, but agreed to settle for $15,000 to avoid ongoing litigation expenses and conserve remaining assets for payment of refunds to consumers.
The company contends that the typing up of assets and the FTC’s initial injuction meant that Butterfly Labs was “prevented” from issuing refunds to customers as well as the testing and shipping of additional products.
The original charges were brought forth by the FTC in September 2014, when Butterfly Labs was sued and shut down. At the time, the suit by the FTC alleged Butterfly Labs had engaged in “unfair or deceptive business practices in or affecting commerce.” Butterfly Labs subsequently attempted to dismiss the FTC complaint. Eventually, the mining hardware developer saw the light of day again after reopening in early 2015.