UPDATE: Butterfly Labs Motion to Dismiss has been denied, presumably because they broke some rule on page limits. We should take that as their rant (covered below) was too long for THE MAN to take.
The Federal Trade Commission filed Case “4:14-cv-00815-BCW” on September 15th, 2014. In their report, the FTC claims that BFL did a bunch of dumb things. These include:
–Refusing to refund payment, by flipping between two policies: No refunds, and refund offers that were never fulfilled.
–Josh Zerlan, Vice President of Product Development, testified that BFL used pre-paid rigs to mine for BTC before shipping (if they were even shipped). This may explain why some were broken messes by the time they got to customers.
–Because the products were shipped so late (or not at all), the rigs were incredibly outdated, and because of that, miners couldn’t use the rigs properly. (Via FTC):
–Refusing to ship the BitForce miner months after pre-orders, then using deceptive marketing to get people to buy or upgrade to a newer miner, the Monarch.
For these reasons, primarily, the FTC had temporarily shut down operations at Butterfly Labs (From what I understand, some operations have since resumed after a TRO elapsed. More on that later). The FTC has said in their later report: