Feds Got Nearly 300 Complaints About Bitcoin Miner Maker

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300 complaints in 18 months and these guys still aren't in jail? How does that work?

In its short existence, Butterfly Labs has become one of the world’s most mysterious Bitcoin-related companies. For the past year, the Kansas-based manufacturing company has faced numerous accusations of fraud. Currently, the company is battling one lawsuit in federal court with more likely on the way. But Butterfly Labs previously lost a civil case by default in Kansas’ Johnson County Court in late November 2013. The plaintiff, a Californian named William Lolli, won a judgment of more than $13,000 but told Ars that he had not yet collected the award.
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The entire ASIC pre-order industry is a scam.

The companies ALWAYS delay delivery by at least 1 month, if not more. They give manufacturing delay excuses, periodic updates that make it look like they will deliver soon.

The people who did preorder an early batch might get ROI, or think they will make much more than ROI, so they don't complain too loudly.

The asic companies will finally ship when it's not profitable for them to mine with it anymore.

The Cointerra guys did the same thing. You couldn't get ROI on an order from the "early Jan batch", which, oh by the way, shipments were delayed until the last week of Feb. By that time the BTC prices were still okay around $600, but the dip in price and constant 20% increases in diff caused the rigs to be unprofitable.
 
Even if they did manage to deliver products to the people who were duped into buying them, there's no point now since they won't actually turn a profit (not that they did before with all the exchanges being scammy).
 
Things like this make me think paying thousands of dollars for products that don't exist is a bad idea.
 
This is exactly why I do not pre-order and wait till it is out. Then I'm not "investing" money of a product that I'll get MONTHS down the road and may not get a ROI...
 
Anybody who pre-orders an ASIC is just asking to get ripped off. All you are doing is making these companies even more rich by letting them mine with your ASIC you paid for until its ROI is none then they ship it out to you. I honestly dont understand how some people can pay 10k for an ASIC and wait 4 months to get it and hope they make their money back.
 
CreepyUncleGoogle said:
Even if they did manage to deliver products to the people who were duped into buying them, there's no point now since they won't actually turn a profit (not that they did before with all the exchanges being scammy).
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Most people on the [H] who talk about bit coins are actually just opening their mouth to insert phallic shaped devices to suck on.
 
Steve said:
300 complaints in 18 months and these guys still aren't in jail? How does that work?
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Because our current executive office administration is more interested in building their regulation and power than actually doing anything with it. The more trouble they let loose, the more then can cry to the oblivious voters that they need more power to do something, and the voters believe them.
 
Zuul said:
Can these ASICs be used for anything else than mining?
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Sure if you write the code for that particular proprietary ASIC.

Cryptocurrency is in its infancy. It is volatile and speculative. You are rolling the dice buying from them, but IMHO, it is a speculation worth pursuing.
 
Pffffft... one should checkout the scams in Forex!

Bitcoin is very small potatoes in comparison.
 
Yakk said:
Pffffft... one should checkout the scams in Forex!

Bitcoin is very small potatoes in comparison.
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Forex in general is a scam. You have to spend millions to make thousands. If you're lucky you can buy in during an economic downturn and ride the wave out.
 
I took a punt on one of thier miners. And I can honestly say I did receive it, 9 months after I ordered it. After the first 3 months I started to email and ask them what was going on and in 6 months I got two replies back each consistining of one sentance basically saying "Its on its way". I called thier number loads of times, and all there was, was an automated menu system that took you in circles.

When it did arrive I discovered that it was actually a refurbished machine, either that or the build quality was so below professional it was a joke.

Anyway I plugged it in with the power supply that came with it. And to be fair it ran for 2 weeks without and issue. Then suddenly the cheap psu blew and tripped the house power.

Replaced the psu, it was back up and running. Stayed like that for a month or so, then it gave out and just died.

To be fair again, this BFL miner does have a lifetime garrantee. But to be equally fair I havent sent it back becuase I doubt I would ever see it again. The BFL forums are full of unhappy customers and thier reputation on every cryptocurrency site is, well, not too positive.

So what I learnt from this was the difference between a scam and BFL is one involves lying, cheating, thieving scum bags who will say and do anything to get your money, leaving people in emotinal distress and to ruin thier finances, the other is a scam.

Luckily for me I didnt purchase the miner for anything more than to satisfy my curiosity and I really feel for the people who got caught out by these guys who were more optimistic than myself.

One other thing I will say is due to what I have learnt about this company and thier products I seriously doubt any of thier customers have made any ROI on any of the equipment.
 
The odd thing is the miner community did not exactly hide the fact that these people were scam artists. People were willing to suspend disbelief out of greed, and they were rightly punished for it.

This information was essentially instantaneously available in the community, whereas looking to the FTC is practically byzantine in terms of speed of information in such an emerging market. Not even remotely adequate 'protection'. People would be better off learning not to outsource commonsense to these governing bodies.
 
It's funny how people who don't have the slightest clue on the time and effort it takes to bring up a chip (ASIC or otherwise), testing them then doing a revision of either the chip or the board, etc., let alone deal with the logistics of importing them from an overseas fab, especially one in China where it takes a while to get through customs as it is.

that said, I too was a bit annoyed that my small order (relative to those people who sunk 10s of thousands into it) was delayed by a mere 6 months (some people had it worse). But all is well.
I didn't use their power brick (I had a spare 80 Plus Gold power supply to use) so didn't run into issues there.
 
The main issue here is miners have proven to be those kind of people who buy into hype. They have to have everything that sparkles and is "seen on TV".

You shut a company like this down naturally by people doing their own research and easily making the choice not to purchase products from them. Happens to plenty of companies large and small everyday.

Except with "imma get rich quick" miner mentality. If I could market rocks as being the next big piece of mining hardware I would be a billionaire before miners finally realized it was all hype... And they were just rocks.
 
J Macker said:
The entire ... pre-order industry is a scam.
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FTFY.

It doesn't matter if it's pre-orders for a bitcoin mining machine or pre-orders for a video game, etc. Pre-orders provide no benefit to the consumer at all. Period. I really don't understand why anyone pre-orders anything. Want my money? That's nice. I'll give it to you when you have a product that is worth buying and you have it produced, in stock, and ready to sell to me. I don't care how much you promise me your product will be great, blah, blah, blah. I'll be the judge of that when you produce a final product for my inspection, only then will your product have a determinable worth, until then it's just vaporware. Until you have a final product produced you can put your greedy little hands back in your pockets. Seriously, no company is going to avoid selling you a product because you didn't pre-order it. A company wants to make money, it will sell it to you no matter when you want to buy it as long as it's profitable to do so.
 
It's been known for quite some time that the founder of BFL was convicted of a $20+ million mail fraud scheme.
 
It seems Butterfly is not the only company coming under fire. Hashfast appears to be in the same boat.
 
I received my miner from them - 5 months late.

Sold it a couple weeks later for a little more than I paid for it. I'm pretty sure I made more money by selling it than I would have by mining with it.
 
robble said:
I received my miner from them - 5 months late.

Sold it a couple weeks later for a little more than I paid for it. I'm pretty sure I made more money by selling it than I would have by mining with it.
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You definitely did, those first-gen ASICs are a money-losing proposition now unless you're stealing electricity.
 
Video games, ASICs, Electric cars, when are people going to learn to stop preordering?
 
MoFoQ said:
It's funny how people who don't have the slightest clue on the time and effort it takes to bring up a chip (ASIC or otherwise), testing them then doing a revision of either the chip or the board, etc., let alone deal with the logistics of importing them from an overseas fab, especially one in China where it takes a while to get through customs as it is.
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Um, I don't see anyone saying these companies should magically produce the hardware instantly. The problem is they are taking pre-orders based on promises that they then fail to deliver.

We are all aware that hardware development takes time, and yes hardwares do get delayed sometimes. However, the difference is we don't see Intel or AMD opening up pre-order for future chips and make promises on when they will deliver it, and of what quality the hardware will be. They only make their products available to the market when it's shipped. Therefore the consumers will make their decisions based on actual product that do exist and have been reviewed, rather than just a bunch of promises.
 
MoFoQ said:
It's funny how people who don't have the slightest clue on the time and effort it takes to bring up a chip (ASIC or otherwise), testing them then doing a revision of either the chip or the board, etc., let alone deal with the logistics of importing them from an overseas fab, especially one in China where it takes a while to get through customs as it is.

that said, I too was a bit annoyed that my small order (relative to those people who sunk 10s of thousands into it) was delayed by a mere 6 months (some people had it worse). But all is well.
I didn't use their power brick (I had a spare 80 Plus Gold power supply to use) so didn't run into issues there.
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What you mean to say is it is funny how some person who knows nothing about all the complications of producing a chip will gladly take peoples money and promise them a release date with out realistically estimating that date.
 
Darth Millennial said:
Forex in general is a scam. You have to spend millions to make thousands. If you're lucky you can buy in during an economic downturn and ride the wave out.
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Well that was why banks started doing this; as a very safe way to generate money from millions they have just sitting there anyways.

It's the crazy people at 200:1 leverage who thought they knew better... what a mess.
 
I saw this coming back when I did assessment on the feasibility of entering Bitcoin myself. Clearly a series of scams, butterfly is not the only one.
 
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