Butterfly Labs to Resume Limited Business Operations

Butterfly Labs has announced that it will resume limited business operations following discussions with the FTC.

AccessTimeIconOct 3, 2014 at 1:35 a.m. UTC
Updated Sep 11, 2021 at 11:13 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

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.

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

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.