FTC Shuts Down Bogus Bitcoin Op Butterfly Labs, Says “Buttcoin”

September 25, 2014 | Peter Yeh

Butterfly Labs, a bitcoin miner company, has been closed down by the feds. The Federal Trade Commission (FTC) alleges that Butterfly Labs charged people tens of thousands of dollars to pre-order “miners” — specialized computers that sustain the Bitcoin network and generate Bitcoins for the owner.

While Butterfly Labs heavily marketed the miners, they repeatedly delayed shipment, never shipped them and didn’t render refunds. The few they did ship were so late, they were completely obsolete.

In a WSAU radio interview with Malini Mithal, assistant director of the Bureau of Consumer Protection at the FTC, says BL surreptitiously purchased other Bitcoin websites, as part of a deceptive marketing strategy. They posted phony reviews and removed disparaging comments, even hitting the oldest still active Bitcoin business, Buttcoin.

Buttcoin is a website highly critical of “cryptocurrencies” and focuses on the fact that these morons — whether they’re creating fire-hazard “miners”out of Lego, hurling money at incompetent exchanges or repeatedly failing at business — are a consistent source of schadenfreude at the hilarious intersection of stupid.

Hear the full interview here.