Wednesday, April 1, 2020

Deceptive Bitcoin Company Fined $38.6 Million by FTC

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Pesach Lattin
Pesach Lattinhttp://pacevegas.com
Pesach "Pace" Lattin is one of the top experts in interactive advertising, affiliate marketing. Pace Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

The FTC has just reached a settlement with Butterfly Labs in a case dating back to 2014.  Butterfly labs is a Bitcoin mining firm that sells hardware designed specifically for mining.  The FTC stepped in after the company sold millions of dollars worth of hardware that they either failed to deliver or delivered after extensive delays.

These delays often caused the machines to be less effective than they would have been at the time of purchase because of the fact that Bitcoin mining becomes progressively more difficult over time.  In addition, as with any computer hardware sales, there are improvements in technology so that the machines sold were no longer top of the line when they were delivered.

The case was set to go to trial in the next couple weeks but the settlement for $38.6 million has now been agreed upon.  Due to inability to pay, Butterfly labs will end up paying just $15,000 and one of the owners of the company, Sonny Vleisides, will pay another $4000.  Darla Drake, who is the general manager of the company, has to pay the cash value of all the Bitcoins she made using company machines up to $135,878.  It is expected that she won’t be able to cover that amount and anything remaining will be suspended.

Butterfly Labs is still open and doing business but they have now been banned from making any type of misleading claims concerning their products.  In addition, they cannot sell any hardware with upfront payments unless they can have the equipment delivered within 30 days.

Jessica Rich, the director of the Bureau of Consumer Protection, said, “Even in the fast-moving world of virtual currencies like Bitcoin, companies can’t deceive people about their products.  These settlements will prevent the defendants from misleading consumers.”

Given the growing popularity of Bitcoins and the fact that more and more digital companies are accepting them as payment it is important for marketers to keep up to date on news related to this topic.  The more stability in the Bitcoin market the better it will be for everyone. This includes in the Bitcoin mining industry.

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