For those who’re either new to mining, or have been living under a rock for the past 2 years, Kansas based Butterfly Labs are renown for their unethical business practices; From delivering unsatisfactory hardware that didn’t ship in a timely matter om hardware too obsolete for miners to make back their moneyr. This all came to a head in September when following dozens of complaints from customers, the FTC intervened and shut down the company, freezing their assets for violating section 5(a), which is the guidelines to be followed regarding unfair or deceptive acts or practices.

The Section states in it is the first paragraph that “Section 5 of the Federal Trade Commission Act (FTC Act) (15 USC 45) prohibits ‘‘unfair or deceptive acts or practices in or affecting commerce.’’ The prohibition applies to all persons engaged in commerce, including banks. Under section 8 of the Federal Deposit Insurance Act, the Board has the authority to take appropriate action when unfair or deceptive acts or practices are discovered”.

This is precisely what happened here, and FTC delivered on its promises by requesting that Butterfly Labs be placed in to receivership, or when someone is appointed to take control of a failed business, as well as have its operations suspended to prevent any more potential fraud. Below is a screenshot of the first two pages of the official court document regarding charges and other details.

Butterfly Labs FTC

However, last week The US District court denied a request filed by FTC, which would have allowed BFL to operate limitedly under court supervision. The reasoning Judge Brian C Wimes supplied was that evidence found wasn’t enough to show that BFL would continue to violate the law.

BFL promises to change, by submitting monthly document records as well as ending the pre-order business model when it resumes operations. The court also disregarded misleading customer allegations by ignoring overestimated profitability claims on top of many things.

It seems BFL is perhaps turning a new leaf, but still many miners are sceptical. The next couple months of BFL will be critical as all eyes are on them. Still, it will be hard to change the public image and reputation of BFL but if they are determined to, anything is possible.

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