Butterfly Labs Inc. Appeals to Federal Judge to Dismiss the Government’s Case

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The Central Bank of Portugal Warns Users against Bitcoins

In an appeal to the federal judge, Butterfly Labs Inc., the Bitcoin equipment seller in Overland Park, said that the case against by the government against it should be dismissed on legal grounds. The case earlier in September was succeeded by the Federal Trade Commission had succeeded through sealed court filings.

The company had then given control in the hands of a court-appointed receiver after the regulators alleged that Butterfly Labs took money from 20,000 consumers without shipping the computers they ordered, or delivered worthless equipment. In its appeal the FTC had said that consumers were taken for between $20 million and $50 million.

However, in its court filing Butterfly Labs Inc. said that the FTC failed to make a claim “on which relief can be granted.” Special mention was given to the fact that Butterfly Labs had stopped its “pre-order sales” business in mid-July so it no longer accepted money with a promise to deliver equipment.

The Company Resumes Some of Its Operations

The Kansas based Bitcoin company has now resumed some of its business after it was shut down after being sued by the federal government. The respite came when US District Brian C. Wimes allowed it to reopen for limited operations. Its assets were frozen and a federal receiver was given temporary control of the company on Sept. 18.

Though Butterfly officials denied all the allegations as they claimed that the judge’s order was a positive step, they hope that the remaining restrictions will be taken away in subsequent hearings. The company believes that there have been several inaccurate allegations and they are confident to win the legal battle.

In a statement the company said that while the order does not allow Butterfly Labs to fully serve our customers as desired, it is a step in the right direction and will allow for limited order fulfillment. The decision came after federal attorneys and Butterfly representatives failed to strike a win-win negation.

The FTC has been alleging that Butterfly either did not deliver computers to customers or sent machines that did not work and prevented customers from earning Bitcoins. However, the allegations have been set aside by the company in its arguments.

Hearing the two parties, a federal judge prompted them to agree on terms that allowed Butterfly Labs to resume limited business, though the company has said it is less than it had hoped for.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com