Spil a puny business possessor, a very effortless way to lose the trust of others is to not give them the things you promised when they transferred you money. Another way is to take that money and waste it on craziness. Thesis studs did both, ArsTechnica reports.

Feds say Bitcoin miner maker Butterfly Labs ran “systematic deception” [Updated]

Te fresh civil suit, FTC alleges BFL spent millions on massages, guns, and more.

Two years ago, Sonny Vleisides (right) introduced himself to the BitcoinTalk.org message houtvezelplaat, explaining away some dodgy run-ins with law enforcement surrounding a gambling webpagina he previously worked for. It looked like an attempt to come clean by a man who needed to earn the community’s trust regarding his fresh venture: Butterfly Labs, a company that manufactured high-end laptop equipment. He ended his postbode with optimism:

The bitcoin community and it’s success are significant to mij and my past isn’t a threat to it or to the BFL corporation. I hope you can see that.

It seemed to work: ",I’m pleased,", read the very first reply. Vleisides and playmate Nasser Ghoseiri (left) went on to become some of the most hated actors te Bitcoin world, earning Kansas-based BFL a notoriously unscrupulous and scammy reputation, even ter a fledgling finance sector that’s no stranger to unscrupulousness. Years of customer anger are now a federal lawsuit, says ArsTechnica:

Bitcoin Kingpin Admits Everyone`s Money Is Gone

Japan-based Mt.Gox CEO Mark Karpeles—who may or may not be Chris Farley reanimated with the soul of …

",The FTC alleges that one corporate defendant and three individual defendants have taken ter overheen $50 million by operating a scheme that required consumers to pre-pay for machines that would permit consumers to ‘mine’ for Bitcoins, a fresh virtual currency,", the complaint states. ",Defendants either never delivered thesis machines or delivered them so late that they became obsolete.",

If they weren’t shipping out Bitcoin mining gear, what were they doing with all the money they made? According to complaint documents, they were spending it on themselves:

The FTC alleges Butterfly Labs’ operators took customers for up to $50 million, which will buy you fairly a few saunas. The FTC is now seeking to seize Butterfly’s assets while the faltering company tells Ars ",The government wants to shut Butterfly Labs down, and wij are not going away without a fight to vindicate bitcoin, our company, and our employees.",

Related movie: Daily: WTF is Bitcoin Diamond / Altcoins Attack!


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