There have been a lot of questions and complaints directed at Bitcoin mining company Butterfly Labs in recent months, and documents obtained by Ars Technica reveal that something is fishy about the company. According to Ars, which received documents via the Freedom of Information Act, 300 complaints have been made against Butterfly Labs with the Federal Trade Commission (FTC).
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Since mining Bitcoin is no longer even remotely profitable without a dedicated machine for the process, individuals and groups have turned towards companies like Butterfly Labs to provide Bitcoin mining equipment. Unfortunately, it appears as though Butterfly isn’t the best company to work with.
Ars says that almost all of the complaints–some of which have come from places like Estonia and Argentina–state that orders were made but never actually fulfilled and when refunds were requested, no money was given back.
During an April 2014 probation hearing, documents reveal that a Kansas federal judge told Butterfly co-founder Sonny Vleisides that the company has a “strong smell” of fraud about it. This accusation is quite substantial but for hundreds of complaints–most of which are for the exact same thing–to be made in less than two years, something is definitely strange about Butterfly Labs, even though it is one of the largest Bitcoin mining companies.
A quick Google search shows that the company is at least struggling to meet demand. On Google, Butterfly Labs has a 1.3 star rating based upon 27 reviews, with some of the reviews calling the company a “scam”. It is important to note that when reviews have been done on the mining equipment, reviewers have noted that the machines work well and are very fast. So, instead of Butterfly actually being a scam, it may very well be unable to meet demand and is therefore in a bad situation that it has failed to handle properly.