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Outbyte Driver Updater FREEFix the driver behind crashes, sound loss and screen glitchesFind Drivers →Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →In September 2014, a federal court in Missouri halted Butterfly Labs at the Federal Trade Commission’s request while the agency pursued a civil consumer-protection case. The FTC alleged that the Bitcoin-mining hardware company took customers’ money for computers it did not deliver, delivered too late to be useful, or mining services it had not provided. The allegations were not a criminal conviction; the case later ended in settlements announced in 2016.
What the FTC alleged about Butterfly Labs
The FTC’s September 23, 2014 announcement said its complaint accused Butterfly Labs, also known as BF Labs, Inc., of charging customers thousands of dollars for specialized computers intended to mine Bitcoin. According to the complaint, the company often failed to deliver the machines or delivered them only after delays that made them practically useless for mining. The FTC also alleged that customers paid in advance for mining services they did not receive. FTC announcement, September 23, 2014
The figures in that announcement describe the agency’s complaint-era account, not independently audited totals: the FTC said more than 20,000 consumers had not received computers as of September 2013. It reported that BitForce machines were priced from $149 to $29,899 and that few, if any, of the newer Monarch machines had been delivered by August 2014.
How the case proceeded
The case was Federal Trade Commission v. BF Labs, Inc. et al., civil action 4:14-cv-00815-BCW in the U.S. District Court for the Western District of Missouri. The court’s case timeline records the September 2014 complaint and temporary restraining order, an amended complaint in May 2015, and proposed settlement orders in February 2016. FTC case docket
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The initial court action halted the operation while the civil case continued; it did not itself resolve the allegations. On February 18, 2016, the FTC announced that BF Labs, Sonny Vleisides, and Darla Drake had agreed to settle the agency’s charges. The settlement orders placed limits on what they could represent about virtual-currency earnings, delivery dates, and whether products were new or used. FTC settlement announcement, February 18, 2016
What the 2016 settlements required
The orders barred BF Labs and Vleisides from taking advance payment for mining products unless the products were available and could be delivered within 30 days. If they failed to deliver within that period, they had to provide a refund. The FTC also reported partially suspended monetary judgments:
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| Party or parties | Judgment described by the FTC | Suspension condition reported by the FTC |
|---|---|---|
| BF Labs and Sonny Vleisides | $38,615,161, partially suspended | Subject to payments of $15,000 by the company and $4,000 by Vleisides |
| Darla Drake | $135,878, partially suspended | Suspended upon surrender of the cash value of Bitcoins she obtained using company machines |
These are the judgment terms described in the FTC’s 2016 announcement, not evidence that the full amounts were collected or distributed to customers. The official sources cited here do not establish how much customers ultimately received in refunds. The FTC noted that stipulated final orders have the force of law once approved and signed by the district court judge.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why “scam” needs a legal qualification
The headline’s word “scam” reflects an allegation of consumer deception, not a criminal conviction. In 2014, the FTC sought civil relief based on its complaint; in 2016, the named parties agreed to settlements. The careful distinction matters: the court halt was an interim measure, and the later settlement restrictions and judgments are the case’s documented outcome.
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Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minuteAt the time of the 2016 settlement announcement, Jessica Rich, then director of the FTC’s Bureau of Consumer Protection, said: “Even in the fast-moving world of virtual currencies like Bitcoin, companies can’t deceive people about their products.” FTC, February 18, 2016
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