Butterfly Labs to Resume Limited Business Operations

Pete Rizzo
Oct 3, 2014 at 02:35 UTC
Updated Oct 3, 2014 at 13:12 UTC

Embattled bitcoin mining manufacturer Butterfly Labs has announced that it will resume limited business operations following discussions with the Federal Trade Commission (FTC).

The Missouri-based company will not be allowed to serve new consumers when it reopens, and will be restricted to fulfilling existing customer orders. Butterfly Labs further confirmed it will remain under the direction of a court-appointed receiver who will oversee the business.

Butterfly Labs suggested that it aims to use this opportunity to rebuild its market perception, which it acknowledged has been impacted by the recent FTC actions.

The company wrote:

“Butterfly Labs views the order as a promising sign for the future of our company, our customers and our employees. This lawsuit has severely damaged our reputation and it is up to Butterfly Labs to attempt to repair that damage.”

The announcement follows a report from The Kansas City Star that suggested Butterfly Labs was holding initial discussions with the FTC about reopening its business earlier this week.

However, the actions by the FTC may not be a validation of the company and its efforts. In past filings, the FTC has indicated that Butterfly Labs should be awarded ancillary relief only as necessary to reduce the likelihood of consumer injury.

Reputational damage

Butterfly Labs said that though it is pleased with the announcement, it still finds past statements by the FTC to be contentious.

The company wrote:

“There are a number of unsubstantiated claims circulating about Butterfly Labs. We intend to address all inaccuracies in due course, including the false claims around burn-in testing and Butterfly Labs inappropriately mining bitcoins with customer equipment.”

New documents in the case filed on 27th September levied such allegations against the company, suggesting that Butterfly Labs conducted extended testing of its machines after they were purchased by customers to profit from their production.

The FTC has also claimed that Butterfly Labs employees profited from mining rigs that were returned by customers or left in company custody after the consumer was issued a refund.

Challenging times

Butterfly Labs ended its statements by acknowledging the furor around the company in recent weeks, thanking those who have stood by its business.

“Butterfly Labs thanks its many customers, employees and business partners for staying with us during this challenging time,” the statement reads.

Prior to its shutdown, Butterfly Labs was besieged by manufacturing delays and customer complaints, however, it was an early market leader, having been in operation since 2010.

Butterfly Labs was formally shut down in late September following months of customer complaints that it failed to deliver products as advertised.

CoinDesk has reached out to the FTC for comment, but has not received an immediate response.

Image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.