Butterfly Labs' Bitcoin
Would that be Buttcoin?
The US Federal Trade Commission has stuck another pin through Butterfly Labs, obtaining a court order that the company hand over any Bitcoins it had mined for itself. The company had promised potential customers that its US$29,000-plus servers would embiggen punters' Bitcoin wealth to wildest-dreams level. It turned out to be …
Not bad - build up machines using your customer's prepayment, let the machines mine for you until they are obsolete, deliver machines and repeat.
Or with other words, instead of "Stop digging for gold, and start selling shovels”, you take the money, keep the shovels to scratch up all gold for yourself and hand it over, after the claim is exhausted.
Icon - where they belong to.
I have to say I'm a bit bemused by what is going on at BFL.
I can see that there are certain claims against the company, which I have no expert knowledge of and so I will await the proof of what they have got up to.
And I have heard that they took money, without shipping specific goods in a timely fashion and those customers should get refunds. No problems there.
And yet, they do/did make some very nice kit, which they shipped (eventually), and which is perhaps a little less efficient (heat dissipation wise vs power input) compared to say Rock Miners - I've got some Jalapeno's, and BFL 60's and they are nicely made pieces of kit. You can get them on fleabay for less that £30 or £50 (respectively) and not only do they keep your house/office warm, they also do a bit of Bitcoin mining too.
So, it's not as if BFL never shipped a single device and just held onto the money - they were making reliable items, which they sold.
If only they actually did that, instead of lying to buyers about timelines and where their money was going.
BTW, it's illegal in the US to take money for pre-orders, then use it to fund development activities. That's what Kickstarter is for, not pre-orders.
The issue is not what the company would eventually do (though they were at least 9 months behind when they were raided and had assets seized), but the fraud in how the company was being run. That's illegal and, frankly, based on the chat logs, I'd say it should be punished. You can't treat a company like your personal bank account, because that's called embezzlement.
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