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FTC Complaints Detail Troubled Past of Bankrupt Bitcoin Miner CoinTerra

(@pete_rizzo_) | Published on January 29, 2015 at 19:38 BST
Feature

FTC

“I feel like I [was] cheated.”

The statement is just an excerpt from one of the 39 formal complaints filed with the US Federal Trade Commission (FTC) against now-bankrupt bitcoin mining company CoinTerra and revealed in a new Freedom of Information Act (FOIA) request.

The 39 complaints are a far cry from nearly 300 complaints lodged against competitor Butterfly Labs before it was temporarily shut down by the FTC in September. However, the complaints paint a detailed picture of the frustrations long faced by CoinTerra customers.

The full complaints, which were received with personal information redacted, showcase the breadth of customer accusations that CoinTerra failed to meet advertised shipping dates, build hardware to the desired specifications or issue refunds in a timely manner.

One customer complaint reads:

“On 12/1/2013 I purchased a computing unit for a total of $6,288.35 (including all applicable taxes and shipping). The unit purchased had stated performance numbers. Once the units started shipping, they were not close to meeting the performance numbers promised.”

The customer goes on to state that Cointerra missed suggested refund times, before ceasing communications with the customer, in what was just one of many customer service frustrations detailed in the assembled remarks.

Others showcase the alarm many customers felt at the lack of response from the company.

“Just yesterday, 7th May, I had called the company more than 30 times, and after calling and calling, I finally was able to talk to someone, however, I got disconnected halfway,” another complaint reads.

Escalating issues

The complaints indicate that customer frustrations were heightened in April, when the company continued to delay refunds for TerraMiner IV products.

One filing illustrates the lack of faith among customers at the time that their concerns would be addressed by CoinTerra.

“After repeatedly asking when my funds would be returned, today (22nd April), Cointerra replied with this: ‘We are drawing near to your queue position for your refund, but before we process it I wanted to reach out to you regarding an offer,’ which clearly indicates that they have made no effort to return my funds,” the filing reads.

Pre-order refund updates related to the mining unit would continue through June. During this time, CoinDesk continued to receive complaints about the refund process from customers as well.

Responses suggest international customers also appealed to the FTC for assistance with refunds.

“It's a terrible shopping experience in US. I had believed American company will never do anything against law,” reads another complaint. “It seems I have made a mistake.”

Reimbursement unknown

Though customer complaints indicate many customers may still be owed funds from CoinTerra, it remains unclear when or if buyers will be reimbursed.

Statements from the company as recently as 8th October suggest 70% of customers had been reimbursed as of that time. However, some customers have reported failing to receive refunds as recently as 2nd January.

CoinTerra would later announce that it had defaulted on its secured notes and that payments made to customers would be suspended indefinitely.

CoinTerra filed for a Chapter 7 bankrupcty on 24th January, citing between $10m and $50m in liabilities and including a lengthy list of creditors that included commercial partners like data services provider CenturyLink, US bank Wells Fargo and C7 Data Centers, along with a wide range of private citizens and investors.

Still, CoinTerra CEO Ravi Iyengar has remained steadfast in statements that suggest he believes the company did its best to satisfy its customers, but that it was sometimes hindered by its own success.

“We were probably among the only few who delivered on time and in most cases ahead of time,” Iyengar told CoinDesk on 14th January. “We have no customers who wanted their hardware that didn’t receive it.”

Image via CoinTerra

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