A law firm made news this week when they announced that a class-action lawsuit has been filed against Butterfly Labs which challenges both the sales and advertising practices of the Kansas-based mining hardware manufacturer.
In the complaint, filed by Wood Law Firm, it is alleged that the company might have collected up to $25 million in pre-order payments, using equipment manufactured for customers to mine for themselves as part of a quality assurance testing program.
The complaint also alleges that Butterfly Labs used portions of pre-order payments to make loans to shareholders, and even purchase a house and vehicle for a shareholder.
“Butterfly Labs does not believe this lawsuit has any merit, and we are working with our attorneys to clear the matter up as quickly as possible,” a company representative told me today in an email response when I asked for public comment.
Customers have found themselves frustrated with the company mostly due to delayed products, which were considered to be significantly less powerful when received due to increasing mining difficulty. It should be noted that the very nature of this industry makes it incredibly challenging for mining hardware manufacturers due to the ever-increasing need to build more powerful hardware to keep up with difficulty rises.
Certainly, it will be interesting to see how this case progresses.