Butterfly Labs Faces Class Action Lawsuit

In February, Butterfly Labs, a popular Bitcoin mining hardware company, was facing a civil lawsuit in an American federal court based on allegations that the company did not deliver products on time. Just today, the Wood Law Firm LLC announced that Butterfly Labs customers across America have joined together to file a class action lawsuit against the mining hardware company.

Butterfly Labs Faces Class Action

The class action challenges the advertising and sales practices of Butterfly Labs. The official lawsuit against BFL, Inc, aka Butterfly Labs, aims to get money for customers who pre-paid for mining hardware and did not receive the products on time.

The complaint’s goal is to get the pre-payments made to Butterfly Labs and cover the losses the customers faced due to the company’s negligence. According to the lawsuit, Butterfly Labs asked customers to pre-order an ASIC mining hardware while in actuality, the company used the money to purchase a house and car for a shareholder, and to make loans.

Noah Wood, an attorney for one of the customers said,

“Bitcoin is an exciting and promising new technology. Unfortunately this also makes it an attractive area for people running scams and frauds. Stopping the bad actors and staying vigilant against consumer fraud is absolutely necessary for the successful development of the Bitcoin ecosystem.”

More Details on the Complaint

The complaint alleges that Butterfly Labs possibly collected over $25 million in pre-orders. The lawsuit also claims that Butterfly Labs used hardware that customers paid for to earn bitcoins for the company through mining. This was allegedly done under the banner of “testing” equipment. Interestingly enough, Butterfly Labs told customers that it did not mine for Bitcoin itself. The complaint writes that the testing of customers’ paid equipment,

“enrich[ed] Defendant at the detriment of its customers by both denying the customers’ use and benefit of the equipment they have already paid for, as well as increasing the overall mining difficulty required to generate future bitcoins.”

A full copy of the lawsuit against Butterfly Labs can be found at Wood Law Firm website.

Image via bfl.com