The Federal Trade Commission or FTC has secured the authority from the court to begin converting Butterfly Labs’ Bitcoin holdings into cash reserves. Their court filing says, “Under the supervision of temporary receiver, the following actions may occur immediately […] conversion of receivership defendant’s substantial Bitcoin holdings to cash on a systematic and reasoned basis.”
The government agency had put the motion that was then granted by the US District Court for the Western District of Missouri on 29th October. The permission by the court marks the latest update in the case that began when the FTC filed a lawsuit against the company for fraud and misrepresentation earlier this year in September.
Butterfly Labs is Facing Charges of Fraudulent Activities
As was reported earlier by ForexMinute that Butterfly Labs is alleged to have generated Bitcoin by conducting extended testing of the Bitcoin mining machines it manufactured before delivering the units to consumers. Also, there are allegations that former employees have been profiting by using products returned by customers for personal use.
When the FTC objected and filed a case against the company, it was closed pending trial. However, it has now resumed limited business operations under court receivership which means a court-appointed receiver has been in control of the business, and that this individual will now be able to “manage and administer” the company’s finances.
According to the sources, the latest filing suggests that the receiver will seek to cover potential refund liabilities the company may incur by liquidating the company’s Bitcoin assets. To do the job rightfully and professionally, the FTC receiver may even hire independent professionals or contractors.
Stress would be on the part of the FTC be to ensure the safe transfer of the company’s Bitcoin to the court-controlled wallet as it wants to secure justice to the customers who have been wronged by the company. In fact, the FTC had sought to secure relief on behalf of the consumers and sought the authority to refund consumers and sell off any illegally obtained.
The temporary relief for customers as well as the company has a lot of ramifications and a lot of things will depend on the outcome of the case itself. However, it looks as if this case is going to be a landmark one towards ensuring justice to the customers who lost their valuable investments in Bitcoin mining machines.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org