A long-held suspicion within the Bitcoin community is being tested in court.
Part of the FTC’s allegations against Butterfly Labs is the idea that they built their Bitcoin mining machines using the money customers used to preorder the devices, then kept them for their own use, mining a large number of bitcoins themselves before eventually shipping them to the customer several months later.
It seems like a good way to make a quick buck in the Bitcoin mining business. Announce an incredibly powerful machine, accept customer pre-orders, build the machines with those pre-orders, then mine them into the ground while claiming to have “delays” during construction and shipping.
However, is this the truth? The FTC seems to believe so. In their latest court documents, they claim to have found evidence that Butterfly Labs was engaged in mining Bitcoin, including several racks of computing units “running what appeared to be a bitcoin mining software.”
The FTC also found a spreadsheet on Butterfly Labs co-founder Sonny Vleisides’ laptop which had a log of transactions to Bitcoin wallets which belong to Butterfly Labs.
These transactions include statement names like “Received with…New Eclipse burnin mining account,” “Received with…Bitcoin mining – Eclipse pool,” and “Received with…Forfeiture from Janette to company of 15 bitcoins from office mining project.”
While Butterfly Labs has always denied using the mining rigs they built to mine themselves, court allegations believe otherwise. However, it certainly makes sense for Butterfly Labs to have tested the units they built in order to ensure good working order, and in the process they will have generated bitcion for Butterfly Labs. What remains to be seen is whether these bitcoins were generated through legitimate testing of Bitcoin mining rigs or fraudulent use of consumers’ funds.
Did Butterfly Labs Use Their Mining Rigs To Mine Bitcoins?
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