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Butterfly Labs – An end to the lies and deception

Tuesday 23rd, September 2014 / 18:26
Butterfly Labs – An end to the lies and deception

Icon_scam11We’ve written many feature articles on Butterfly Labs and how they’ve misled the public, today BTC World News is pleased to share that you can celebrate a great win as the FTC dropped the hammer on this bait and switch organization and shut Butterfly Labs down.

For those who don’t know who or what Butterfly Labs is, it is a US based company who manufactures Bitcoin miners.

During the rise of Bitcoin, they were first US-based company in-line producing hardware miners that were ahead of their time. The only downside was, they significantly missed their mark for shipment resulting in millions in Bitcoin opportunities to be missed by consumer and professional miners due to the endless excuses surrounding their shipping delays.

Most of these excuses were portrayed by Josh Zerlan, the primary face and representative of Butterfly Labs.

Even after their first batch of “Jalapeno” miner’s shipped with a year of delays, Butterfly Labs was hard at work conjuring up their next great idea, “The Monarch”. A super powered miner that offered speeds unheard of.

For the record, the type of speeds this device offered could have easily propelled the future of Bitcoin ahead 100 fold.

Butterfly Labs once again put on their same dog and pony show, only this time the cost of the miner was 40 times the original cost of a 1st Gen miner.

Jalapeno’s originally were priced at $159.00 where the Monarch debuted for a whopping $4,900.00.

After Butterfly Labs acquired their first pull of “Pre-Order” capital, they reduced the price by half, not to mention this had taken place for nearly 9 months.

Customers who had invested in the full priced miner’s were outraged, but the simple fact was, Butterfly Labs had their money and there was nothing any single person could do about it. It was a classic case of “shut up and wait your turn” type mentality received from Butterfly Labs staff, Josh and forum moderators.

Sad enough to say, even after the public was burned by the company’s 1st Gen miners, many returned to give the miner and the company a second chance based on the huge discount of 50% off starting on Black Friday 2013. Butterfly Labs promised delivery by January 2014 and anyone who could do the simple math knew this was an excellent investment opportunity that could easily yield hundreds of millions of dollars.

Even with the huge cash cow of Pre-Orders taking place from November through January, Butterfly Labs systematically extended their shipment wait time on their website to compensate for new investor interest while raking in millions.

Excuses from Butterfly Labs ranged from,

  • Faulty Chips (C or D rated)
  • Cooling Problems
  • Hardware compatibility
  • Factory delays

One of their most popular excuses was power consumption claims. Butterfly Labs was unable to ship because they were not able to deliver the power performance originally promised.

The fraud is, Butterfly Labs lured customers in on a “Pre-Order” type scam claiming their revolutionary miner would be available quickly compared to the self-admitting delays and failures experienced before. This enabled Butterfly Labs to acquire tens of millions in “Pre-Order” revenue where, unlike traditional funding, they did not have to pay a single dime in interest or for that matter, pay back the money invested until pressure was put on the company to start issuing refunds. 

Investors in all shapes and sizes stood the wait for as long as 2 years and never received a single miner resulting in losses well into the hundreds of millions. For example, if you received a Monarch miner in January 2014, you would have been able to mine upwards of 30,000 per month USD or 30 Bitcoins in profits.

Each month after the amount reduces due to the difficulty rate increasing. By September 2014 anyone with a single Monarch miner should have been able to generate upwards of $125,000.00 or more in profits.

This was a real financial loss for even the most humble miner / investor.

The question is, will the FTC pursue reasonable damages for all investor / consumers who lost out due to shipment delays?  It seems reasonable that Butterfly Labs be ordered solely responsible for every single Bitcoin that could have been mined and profited from based on their fraud and failure to deliver.

To make this argument more reasonable, Butterfly Labs refused to return anyone’s investment for over 6-months where it even took upwards of 2 additional months to receive a refund.

It would be more than reasonable that they are responsible to repay those losses acquired by the public for the time they held investment hostage based on the difficultly rate which is absolute fact and can not be manipulated. There is no need to estimate what was lost by everyone as there are many Bitcoin calculators available to easily total what each miner / investor is entitled to.

Butterfly Labs is not the only “Pre-Order” scam out there, recently we reported that Coin, a digital wallet with similarities to Google Wallet and Apple Pay are pulling the same exact stunt as Butterfly Labs. Coin notified customers recently that their “Pre-Order” would be delayed for a another full year, even after the public waited for a year already. We’re sure it won’t be long before the FTC catches up to them also.

Most importantly, Bitcoin is strong and healthy with many companies who do provide quality products and services. It’s a fantastic win for the Bitcoin community.

BTC World News will keep you updated on future events due to the shutdown of Butterfly Labs.

Buyer Beware of the Pre-Order Scam

 

 

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