Butterfly Labs Pay Settlement of $15,000 to FTC in Misrepresentation Case

In 2014, Butterfly Labs, manufacturers of bitcoin mining encryption processors, were brought to the attention of the FTC for possible cases of misrepresentation that the company was alleged to have carried out. Today, Butterfly Labs has reached a settlement with the Federal Trade Commission regarding these claims, whereby they will pay the FTC $15,000 to satisfy all allegations, in addition to other terms, such as continuing its previously established policies of paying refunds and of no longer accepting up-front payments from consumers on pre-orders.

The agreement also resolves potential claims asserted by Butterfly Labs against the FTC. A previous ex parte action had a significant impact on the running of the company, effectively shutting it down for almost four months; however, since then, decisions taken by the court have gone more in Butterfly Labs’ favour.

A spokesperson for Butterfly Labs stated: “BFL continues to believe that the FTC case had no merit, but agreed to settle for $15,000 to avoid ongoing litigation expenses and conserve remaining assets for payment of refunds to consumers. Despite successfully defeating the FTC’s preliminary injunction motion, the effects of the temporary restraining order, tying up assets, and the appointment of a temporary receiver decimated the Company’s ongoing operations. BFL was prevented from paying refunds and testing and shipping additional products during the long ordeal. The results of the shutdown and related publicity were devastating.”

Misconceptions that have been raised have been posted in a message on the company website with responses to address each one. These include the allegations that Butterfly Labs never sold a product or gave refunds – Butterfly Labs state that over 50,000 units were sold and have paid over $20 million in refunds. Also noted are lateness in delivery, claims that products were used to generate bitcoin before selling and alleged promises of profitability. In each case Butterfly Labs deny wrongdoing or misleading customers.

A spokesperson commented: “BFL’s highest priority is navigating the business to a path where the Company can generate the funds needed to pay its remaining debts, particularly outstanding refunds, which will be challenging.”


Based near Windsor, England, Matthew Warner is an enthusiast for innovative, cutting edge technologies. He is a B.Eng. graduate in engineering with honors from the University of Warwick and also holds an PGCE in education degree. Matthew is a member of Mensa.
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