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Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page1 of 71

DECLARATION OF DANIEL TEMKIN

PURSUANT TO 28 U.S.C. § 1746

I, Daniel Temkin, hereby state that I have personal knowledge of the facts set forth below. If

called as a witness, I could and would testify as follows:

1.

I am a citizen of the United States and am over 18 years old. Iam employed as a paralegal specialist with the Federal Trade Commission (“FTC”) in the Division of Financial Practices (“DFP”). My office address is 600 Pennsylvania Avenue, N.W., Mail Stop CC 10232, Washington, D.C. 20580.

I began working at the FTC in August 2013. My responsibilities include investigating suspected violations of consumer protection laws, including the Federal Trade Commission Act, the Truth in Lending Act, and the Electronic Fund Transfer Act. In the normal course of carrying out my responsibilities, I regularly use Internet search engines, electronic databases, spreadsheet software, and a variety of other software-based investigative and organizational tools.

At the FTC, I was assigned to the FTC’s investigation of this matter, which came to include one company: BF Labs, Inc. d/b/a Butterfly Labs (“Butterfly Labs”), and three individuals: Darla Drake a/k/a Jody Drake (“Drake”), Nasser Ghoseiri (“Ghoseiri”), and Sonny Vleisides (“Vleisides’’) (collectively referred to as “Defendants”). Drake, Ghoseiri, and Vleisides, will be referred to separately as “Individual Defendants.”

In the course of the investigation, I reviewed the publicly available forum on Butterfly

Labs’ website, located at https://forums.butterflylabs.com. Employees of Butterfly Labs

frequently respond directly to customers on this forum. One of these employees, under

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 2 of 71

the username Slok, is a site moderator. A true and correct copy of the “about me” section of Slok’s profile from the Butterfly Labs forums, showing the title “Moderator,” is

appended hereto as Attachment A.

Deletion of Content from Defendants’ Website

Dy

Several posts on Butterfly Labs’ forum suggest that Defendants’ employees deleted website content after September 18, 2014.

On or around October 7, 2014, a member of Butterfly Labs’ website posted in a forum thread titled “Federal Trade Commission v. BF Labs, Inc.” His post stated, “Who deleted my post? Has the receivership approved of post deletions?” Slok, a site moderator, replied to this post on October 7, 2014. In his response, this site moderator stated, “I did, because it was speculation. I don’t think moderators or BFL staff need approval to remove anything considered not forum worthy.” True and correct copies of these forum posts are appended hereto as Attachment B.

On or around January 6, 2014, a member of Butterfly Labs’ website posted in a forum thread titled “BFL is locking and deleting my threads with no explanation.” This consumer states that his post was deleted after he requested a refund from Butterfly Labs. A true and correct copy of this post and a response from Slok is appended hereto as Attachment B.1.

On October 27, 2014, in the same forum thread, Josh Zerlan, a Butterfly Labs employee, stated, “If you see an unreasonable post or thread, let me know, Ill be happy to take care

of it.” A true and correct copy of this forum post is appended hereto as Attachment C.

Consumer Posts on Defendants’ Website

9

In the course of the investigation, I reviewed posts that Butterfly Labs’ customers made

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 3 of 71

10.

i,

12

on the Butterfly Labs forum.

A forum thread titled “BF labs no contact for a very long time, no buyer protection, should we be worried?” is appended hereto as Attachment D.

A forum thread titled “Is BFL Scamming Us?” is appended hereto as Attachment E. A forum thread titled “Is this True???? “NOTICE: WARNING to NEW CUSTOMERS

of BUTTERFLY LABS INC (BFL)” is appended hereto as Attachment F.

Defendants’ Responses to Consumer Posts

13.

14.

15.

16.

17.

In the course of the investigation, I reviewed Buttefly Labs’ forum threads in which Defendants and Defendants’ employees communicated directly with their customers.

On the Butterfly Labs’ forum, Josh Zerlan referred to posters as “scumbag extraordinaire” and “childish customers,” among other things. Examples of posts from the forum in which Zerlan communicated with consumers are appended hereto as Attachment G.

In a forum thread titled “Refund policy?” Zerlan responded directly to consumers who requested a refund of their order from Defendants. In these responses, Zerlan refers to customers who request a refund as “whiners and complainers.” In the same thread, consumers posted about Butterfly Labs censoring and deleting posts that reference “FTC” or “refund.” A true and correct copy of these posts is appended hereto as Attachment H. An example of a thread from the Butterfly Labs forum in which Slok refers to consumers as “but-hurt” is appended hereto as Attachment I.

A forum thread titled “Why are BFL mods editing my posts to say things I did not say?”

is appended hereto as Attachment J.

News Articles and Consumer Responses to Defendants’ Business Practices

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page4of 71

18. In the course of the investigation, I reviewed various news sources related to the Defendants.

19. An article titled “Butterfly Labs Monarch miner announcement angers customers” and comments posted by readers reacting to this article are appended hereto as Attachment K.

20. An article titled “Butterfly Labs to Resume Limited Business Operations” and comments

posted by readers reacting to this article are appended hereto as Attachment L.

Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the statements made in this

declaration are true and correct.

Executed in Washington, D.C. on November 19, 2014.

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page5 of 71

ATTACHMENT A

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 6 of 71

View Profile: SLok - Bitcoin Mining Forum - Butterfly Labs Page 1 of 2

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Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 7 of 71 https://forums.butterflylabs.com/members/slok.html 11/17/2014

ATTACHMENT B

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 8 of 71

Who deleted my post? Has the receivership approved of post deletions?

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 9 of 71

Federal Trade Commission v. BF Labs Inc. - Page 5 Page 5 of 7

smf, the following are speculation and/or opinion, not facts.

"BFL were still not operating within the law” "nobody had any confidence that they wouldn't just run”

"That is why the FTC had to step in"

Blog Entries: 13 Mentioned: 183 Post(s) Tagged: 1 Thread(s) Quoted: 2112 Post(s)

Latest Blog: Monarch Power and Light (Sound)

Latest Thread: Duplicate IP Report for 10-26-2014

esx es ®@ o Join Date: Aug 2012

Posts: 2,505 Blog Entries: 13

This pretty much covers it.

Ignore User Send PM 10-07-2014, 03:25 PM ii ta? ° SLok @@ Originally Posted by EE oo Moderati = Who deleted my post? Has the receivership approved

of post deletions?

Y/ I did, because it was speculation. I don't think moderators or BFL staff need approval to remove anything considered

Mentioned: 34 Post(s) not forum worthy.

Tagged: 0 Thread(s) Quoted: 604 Post(s)

Latest Thread: eBay Now Allows Virtual Currency Sales

Join Date: Sep 2012

Location: Southwest of Northeast

Posts: 2,167

Ignore User

Send PM

10-07-2014, 05:32 PM #50

a: @@ Originally Posted by JI ca Miner 49'er

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 10 of 71 https://forums.butterflylabs.com/the-monarch-discussion/8863-federal-trade-commission-v... 11/3/2014

AL NaS CUIE LO UUE GLOCHUUIT Ud USS THU MULTE Dascu Cite QUUIESSeS ate MUL POUCIVINY Chie HUI US. ALLE HIVESUYaLINY Le Issue, 1S UCUE INCU LAL Wie PLUVITH & WILE OUUIIal 1st. Al UL OUT Cillai dS Ven @UCEVLSU Ly Ue MUTA Servers WiLiuUL o pruvienr 1 you

are having trouble receiving our email, please contact Hotmail technical support and let them know what the issue Is. http://www. butterflylabs.com is the official website of BFL. Any other website claiming to BFL is a fraudulent site. If your browser bar does not end with "butterflyiabs,com" you are on a scam site. We do not use any other domain name other than "butterflylabs.com” Results 1 to 2 of 2 Thread: BFL is locking and deleting my threads with no explanation.

Thread Tools* Display

B 01-06-2014, 07:16 PM

=a BFL is locking and deleting my threads with no explanation. Junior Member 8 First thread here. Locked with no explanation. Mentioned: 9 Post(s)

Tagged: 0 Thread(s) https: //forums. butterflylabs.com/pos...ning-12gh.html Quoted: 0 Post(s)

Latest Thread: B8FLis locking and

deleting my threads with no Second thread was deleted. Here is the content.

explanation. e«* @ @ ®@ Join Date: Oec 2013

< My other thread has been locked for no declared reason so I'm starting a new one.

Posts: 4 - I received a defective miner. Ignore User - It took 30 days from my time of initial contact for them to respond. - I shipped them my defective miner with an RMA number provided by BFL, requesting a refund.

Tee haat a ee they have not responded to a single email or request for a status update. - My next available option to escalate this seems to be reporting it as a theft to the police.

Anyone got any ideas on how I can get a response?

Instead of trying to hide this situation, maybe BFL should actually contact me.

@ send pm

B 01-06-2014, 07:52 PM oy] Yl SLok © The other thread was closed and opened again yesterday, by me. I closed it because some folk started an unpleasant debate, and It needed a "cooldown". The second one was removed, like mactlaceoe this 3rd one will be, because multiple threads showing the same serve no one, a

Y/

Mentioned: 34 Post{s) Tagged: 0 Thread(s) Quoted: 604 Post{s)

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 11 of 71

ATTACHMENT C

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 12 of 71

Federal Trade Commission v. BF Labs Inc. - Page 9 Page 3 of 10

10-27-2014, 11:24 PM #84 ta? @ BFL_losh @ @@ Originally Posted by I Empl CLL I’ve been thinking about making a summary thread that cover everything known about the case so people can get a synopsis without digging through the forum posts but I presume it will be locked by Slok as my last one was. Blog Entries: 13 Speaking of Slok, it seems that the forums are in a ae . 183 Post(s) “uncontrolled state” at the moment as the usual arma brutal level of comment removal doesn¢ seem to be Tagged: 1 Thread(s) happening. Quoted: 2112 Post(s) OG As for when the case will be finished I was thinking Latest Blog: Monar ch Power and about making “Valve Time Joke” but Im not sure Light (Sound) everyone's a gamer and probably wouldnt get it.

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 13 of 71 https://forums.butterflylabs.com/the-monarch-discussion/8863-federal-trade-commission-v... 11/3/2014

Federal Trade Commission v. BF Labs Inc. - Page 9 Page 4 of 10

Latest Thread: Duplicate IP Report

for 10-26-2014 *Valve is notorious for saying stuff will be released "when it’ done” with no real timeline attached, the FTC case is exactly the same, it will be done when

jolnDate: Aug 20S it’s done, could take a month, could take a year.

Posts: 2,505

Blog Entries: 13 As for BFL’s seized assets, they have access to them

Ignore User after petitioning for their release as long as the judge deems it viable, the multiple 20000 payments made to the board directors for "living expenses” proves this.

Tf all listed expenses from the court docs have been paid via the HMO bank account then itS down to as little as $500000 by my count, must admit the seized bitcoin wallet offers some light of hope and I would be happy getting my original mining hardware worth ($10000) paid in BTC at a reduced rate* as anyone who mines professionally plans on cashing out on a 12 month timeline (minimum) and would only convert coins to hard currency when the conversion rate Is high, BTC is a variable thing the fact that the worth fluctuates isnt that big an issue.

*Say 2 BTC to every $1000 owed.

I was already aware that its perjury for someone directly involved in a case to comment about it in public if said data isnt covered by the documents already released to the public as all court data is confidential till released but I dont see why we comment here Is a bad thing, if anything customers discussing how ASS BACKWARDS the FTC case /s should point out that the FTC isnt actually helping US.

Lastly the reason I originally wanted refund is that my father was suffering with cancer, he’s dead now so Iam happy to go back to getting product instead of refund, I would presume BFL would provide some form of compensation for the extended wait period in the form of extra hardware.

Personally I would like to see all orders DOUBLED* as surely even with BFL covering the extra shipping cost it would be less than the cost of providing full

refund to everyone who's still waiting.

*So if you ordered 3 monarchs you would get 6.

What comments/threads are a problem? I keep an eye on stuff and Slok is around (I think he's been on vacation). If you see an unreasonable post or thread, let me know, I'll

be happy to take care of it.

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 14 of 71

https://forums.butterflylabs.com/the-monarch-discussion/8863-federal-trade-commission-v... 11/3/2014

Federal Trade Commission v. BF Labs Inc. - Page 9 Page 5 of 10

Send PM

10-28-2014, 12:36 AM #85

SS Hello again Josh, the huge amount of “IM DUE REFUND AND I WANT IT NOOOOOOWWW!!!!” threads popping up that haven’t been quashed instantly made it seem like Mentioned: 0 Post(s) Slok wasn’t active anymore, Slok is usually super quick to Tagged: 0 Threads) lock useless threads and delete comments that don’t really Guated: 21 Post(s) add anything to the subject.

Latest Thread: FTC v BFL Take #2

Experienced Miner

Obviously my presumption was wrong, I don’t really mind

x»eee as people can post whatever they like and it doesn’t Join Date: Dec 2013 impact on me one iota I was simply voicing what I Posts: 43 perceived.

Ignore User Would be great if you could comment on the rest (perjury,

I know) because the forum stuff is probably the least important notion in the post you have quoted.

Send PM

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 15 of 71

https://forums.butterflylabs.com/the-monarch-discussion/8863-federal-trade-commission-v... 11/3/2014

ATTACHMENT D

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 16 of 71

Bf labs no contact for a very long time,no buyer protection, should we be worried? Page 1 of 7

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ft Forum Butterfly Labs Post Sales & Customer Service Bf labs no contact for a very long time,no buyer protection, should we be worried?

If this is your first visit, be sure to check out the FAQ by clicking the link above. You may have to register before you can post: click the register link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below.

It has come to our attention that users with Hotmail based email addresses are not receiving email from us. After investigating the issue, it is determined that the problem is with Hotmail itself. All of our email is being accepted by the Hotmail servers without a problem. If you are having trouble receiving our email, please contact Hotmail technical support and let them know what the issue is.

http://www.butterflylabs.com is the official website of BFL. Any other website claiming to BFL is a fraudulent

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Thread: Bf labs no contact for a very long time,no buyer protection, should we be

worried? Thread Tools Display 01-07-2014, 06:50 AM #1 a: Bf labs no contact for a very long time,no buyer

anes Member protection, should we be worried? Mentioned: —_ 0 Post(s) I imagine most people have a similar experience Tagged: 0 Thread(s) I have not been able to get a response from butterfly labs Quoted: 2 Post(s) in over month now, Latest Thread: Bf labs no contact plus they dont accept paypal or card so theres no buyer for a very long time,no buyer protection anymore protection, should we be worried?

esx. eese&#@ Im I right in worrying about sending them thousands of

? i ? Join Date: Dec 2013 dollars? or are they just busy?

Posts: 8 =

Ignore User Send PM Reply With Quote 01-07-2014, 07:26 AM #2

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 17 of 71 https://forums.butterflylabs.com/post-sales-and-customer-service/7389-bf-labs-no-contact.... 11/17/2014

Bf labs no contact for a very long time,no buyer protection, should we be worried? Page 2 of 7

a What do you want to hear?

nae A Monarch ordered today probably won't ship until April, according to Josh. Other companies are offering similar schedules for their products. If you want a company with

better customer service, order from them.

Mentioned: 5 Post(s) Tagged: 0 Thread(s) Quoted: 97 Post(s)

Latest Thread: Outdated information on Monarch product page is a recipe for disappointment

3 ee 8°¢@ 3 Join Date: Dec 2013

Location: I am disappoint Posts: 283 Ignore User Reply With Quote 01-07-2014, 07:36 AM #3

|; ——— J @@ Originally Posted by A co

a. ica What do you want to hear?

Mentioned: 0 Post(s)

Tagged: 0 Thread(s) A Monarch ordered today probably won‘ ship until Quoted: 2 Post(s) April, according to Josh. Other companies are ee a eee offering similar schedules for their products. If you for a very long time,no buyer want a company with better customer service, order

protection, should we be worried? from them. i) oe . oa

Join Date: Dec 2013 I want hear that if I spend $4000 on something Im going Posts: 8 to get it, not pay that amount and for the company to Ignore User disappear Send PM Reply With Quote 01-07-2014, 07:52 AM #4

Going by BFL's track record, you get your product ord eventually. Some people don't have problems with their 8 orders, others do.

Mentioned: 5 Post(s) . :

Ted 0 Thread(s) There are also other companies with proven track records. ee 97 Post(s) Many of them even pledge to refund your money if they

i sisck vhivenk:. Ganibahed miss their promised shipping windows.

information on Monarch product

page is a recipe for disappointment

Join Date: Dec 2013 Location: I am disappoint

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 18 of 71 https://forums.butterflylabs.com/post-sales-and-customer-service/7389-bf-labs-no-contact..._ 11/17/2014

Bf labs no contact for a very long time,no buyer protection, should we be worried? Page 3 of 7

Posts: 283 Ignore User Reply With Quote 01-07-2014, 11:18 AM #5 se @@ Originally Posted by JE co Senior Member w I want hear that if I spend $4000 on something Im

going to get it, not pay that amount and for the company to disappear

Mentioned: 4 Post(s) ; ; Tagged: 0 Thread(s) We all want to hear that. But you're not going to get that

bale 281 P guarantee from any bitcoin mining company. You pay your se Thread: a money and take your chances; if you are not comfortable bhicuaih Chasaiion : with that then don't order. No one is forcing you to.

ee eee Some of the more ‘proven’ (as in: they have a proven Join Date: Oct 2012 product) companies are BFL, KNCMiner, BitFury Posts: 733 (MegaBigPower), and the AntMiner folks. Not sure about HashFast, and CoinTerra has yet to show a working product. BlackArrow hasn't taped out. With BFL you will get your product but they don't best record for shipping ‘on time’ (though they do claim the 65nm products are in stock for immediate shipment); if you are interested in the Monarch, development still has some significant milestones to pass before we see it ship. KNC has nothing in stock right now; BitFury has units in stock, as does AntMiner. None of these companies will accept PayPal or credit card or any other form or reversible payment.

Ignore User

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Send PM Reply With Quote 01-07-2014, 12:46 PM #6

| @E Originally Posted by [II co

Junior Member P .

r] We all want to hear that. But you're not going to get Mentioned: 1 Post(s) that guarantee from any bitcoin mining company. Tagged: 0 Thread(s) You pay your money and take your chances; if you Quoted: 3 Post(s) are not comfortable with that then don't order. No

Latest Thread: No response on one is forcing you to.

refund - Order BFL-179029357

Some of the more proven’ (as in: they have a

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 19 of 71 https://forums.butterflylabs.com/post-sales-and-customer-service/7389-bf-labs-no-contact..._ 11/17/2014

Bf labs no contact for a very long time,no buyer protection, should we be worried? Page 4 of 7

eee proven product) companies are BFL, KNCMiner,

: BitFury (MegaBigPower), and the AntMiner folks. Not Join Date: Dec 2013 sure about HashFast, and CoinTerra has yet to show Posts: 24 a working product. BlackArrow hasn't taped out. Ignore User With BFL you will get your product but they don't

best record for shipping on time’ (though they do claim the 65nm products are in stock for immediate shipment); if you are interested in the Monarch, development still has some significant milestones to pass before we see it ship. KNC has nothing in stock right now; BitFury has units in stock, as does AntMiner. None of these companies will accept PayPal or credit card or any other form or reversible

payment.

What are you going to do next? Make excuses for BP for oil spills or Bernie Madoff for embezzling?

Come on now, that is a completely ridiculous statement. You don't pay your money and "take your chances" and you won't hear BFL say this either. You DO take SOME risk on preorders. You should not take any risk whatsoever on something IN STOCK SHIPPING IMMEDIATELY. Period.

Most of us aren't even asking for immediate shipping. We are asking for communication. We are asking that multiple emails don't get ignored. We are asking that the forum isn't just us posting and then SLoK saying PM BFL_Emily because then what's the point, just PM her with every problem which is the same exact thing as emailing and getting no response so what is the point.

We don't expect perfection we expect them to look like they are trying.

Send PM Reply With Quote 01-07-2014, 12:54 PM #7 | Then you expect too much. ai They are shipping product that works to nearly all of the

Mentioned: 5 Post(s) people who have ordered it.

Tagged: 0 Thread(s)

Quoted: 97 Post(s) If something goes wrong with your order or payment, it

: may take them several days, weeks, or even months for cosines: oecsrgch en them to find it. If you try to contact them, you may have page is a recipe for disappointment difficulties. Their customer service is bad, as Josh has

eeee publicly acknowledged, but they're trying to improve.

Join Date: Dec 2013 Location: I am disappoint Posts: 283

Ignore User

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 20 of 71 https://forums.butterflylabs.com/post-sales-and-customer-service/7389-bf-labs-no-contact.... 11/17/2014

Bf labs no contact for a very long time,no buyer protection, should we be worried? Page 5 of 7

Last edited by MMMM «01-07-2014 at 12:56 PM.

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01-07-2014, 01:16 PM #8

i BE 1 think you are misinterpreting my comments. I am not making excuses. I agree that communication from BFL sucks, and should be a lot better. I know it is

, frustrating. ia I am merely making a generalization that there are no

a ‘= guarantees; every pre-paid order carries risk by See ee definition. What differentiates them is the degree of risk

Senior Member is 8]

Tagged: 0 Thread(s) (which is never 0). I listed a few vendors I consider as Quoted: 281 Post(s) lower risk (‘proven' was the term I used), BFL being i ei 2014-Apr-19 among those. BFL may suck at communication, but I have halen no doubt that an order placed with them will yield a exes 8 product at your door. That has been my experience, and Join Date: Oct 2012 the experience of the vast majority of their customers. The fice: 733 timeliness of that is a different matter, and that is a topic : for another discussion. Ignore User BTC: 1FeS5aGpQmEVeGczbjiShmakWj4LGFt1iStB NMC: NFcfHSBBng622pAriXoh9KtnBPA5CUn6id Send PM Reply With Quote 01-07-2014, 01:25 PM #9 este I don't think you realize a lot of people are being r es aha legitimately screwed on IN STOCK stuff though. Mentioned: 1 Post(s) That is beyond excusable.

Tagged: 0 Thread(s) Quoted: 3 Post(s)

Latest Thread: No response on refund - Order BFL-179029357

Join Date: Dec 2013 Posts: 24

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Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 21 of 71 https://forums.butterflylabs.com/post-sales-and-customer-service/7389-bf-labs-no-contact... 11/17/2014

Bf labs no contact for a very long time,no buyer protection, should we be worried?

01-07-2014, 01:52 PM

Senior Member Ww

Mentioned: 4 Post(s) Tagged: 0 Thread(s) Quoted: 281 Post(s) Latest Thread: 2014-Apr-19 Monarch Discussion

Join Date: Oct 2012 Posts: 733

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Page 6 of 7

#10

I'll say this: if I paid for something that said "in stock, available for immediate shipping" and a week later it still hadn't shipped, I'd be seriously pissed.

There are maybe half a dozen or a dozen people posting on the forum about issues with their 'in stock’ orders. Taken in isolation, that's a lot of people. But what if you found out that for every 1 of those people with trouble, there are 200 people who received their 'in stock’ orders at their door within 1-2 weeks of ordering? Would that change your perception? Don't you think it is within the realm of possibility that with an influx of hundreds of orders a day during the ‘black friday’ and year-end sale periods, that some percentage of those orders might experience some sort of problem?

I'm not saying that is what's happening, since I don't know. But, honestly, neither you nor I have any clue about how many people are being ‘screwed’ on in-stock orders

and, just as importantly, how many are receiving their in- stock orders quickly without any trouble.

Last edited by MMM) 01-07-2014 at 01:54 PM.

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Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 22 of 71

https://forums.butterflylabs.com/post-sales-and-customer-service/7389-bf-labs-no-contact.... 11/17/2014

ATTACHMENT E

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 23 of 71

Is BFL Scamming Us? Page 1 of 9

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05-18-2013, 10:50 AM #1 | ® Is BFL Scamming Us? Junior Member u Just a little tidbit I've noticed of late, there seems to be a Mentioned: 0 Post(s) new user on 50BTC who came out of no where about a Tagged: 0 Thread(s) week ago and is hashing over 500,000 MH/s. Unless Quoted: 1 Post(s) someone happened to get their order of 4 minirigs (or 10 Latest Thread: Is BFL Scamming singles, etc.) it seems either someone is playing a horrible Us? joke or BFL is truly scamming us all. Either that or they eeee®e "test" the systems in the production environment, netting

: themselves profit in the "testing", which would be TRULY Join Date: May 2013 UNETHICAL. Cheers.

Posts: 1 BFL.jpg

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Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 24 of 71 https://forums.butterflylabs.com/bitcoin-news-and-articles/2756-bfl-scamming-us.html?hig... 11/3/2014

Is BFL Scamming Us?

05-22-2013, 08:49 PM

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05-22-2013, 09:11 PM

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#2

I've seen the same thing happened in other pool. 2 users with 359 Gh/s (ouch!!) and it was a new user

well if you think they were scamming us you can think this possibillites

- they used our money to produce the rig

- then they used the rig to mine for themselves (cloaked as testing unit)

- when we ask for refund they'll gave us refund from their mined BTC

- after that they can happily continue to mine with our money being a kickstarter

don't get me wrong, i'm also "pre"- ordered jalapen so we are in same situation here ®. in short this scheme can be the best scamming scheme ever (no don't do it BFLi have faith in you even with it being eroded as time ticking) Next level ponzi scheme

how you guys think ?

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#3

@@ Originally Posted by m

I've seen the same thing happened in other pool. 2 users with 359 Gh/s (ouch!!) and it was a new user

well if you think they were scamming us you can think this possibillites

- they used our money to produce the rig

- then they used the rig to mine for themselves (cloaked as testing unit)

- when we ask for refund they'll gave us refund from their mined BTC

- after that they can happily continue to mine with our money being a kickstarter

don't get me wrong, i'm also "pre"- ordered jalapen so we are in same situation here ®). in short this scheme can be the best scamming scheme ever (no don't do it BFL i have faith in you even with it being eroded as time ticking)

Next level ponzi scheme

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https://forums.butterflylabs.com/bitcoin-news-and-articles/2756-bfl-scamming-us.html?hig.... 11/3/2014

Is BFL Scamming Us? Page 3 of 9

how you guys think ?

If you add to that potentially they used pre-order money to buy ASICminer stock, oh maybe just their paychecks, then shipping BFL in quantity makes that less profitable, conflict of interest.

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05-22-2013, 11:23 PM #4

ef @@ Originally Posted by I co

7 Just a little tidbit I've noticed of late, there seems to Mentioned: 0 Post(s) be a new user on 50BTC who came out of no where Tagged: 0 Thread(s) about a week ago and is hashing over 500,000 MH/s. Quoted: 21 Post(s) Unless someone happened to get their order of 4 atest Tease widbo cad ve minirigs (or 10 singles, etc.) it seems either someone butterflylabs is playing a horrible joke or BFL is truly scamming us eee. all, Either that or they "test" the systems in the

production environment, netting themselves profit in Join Date: May 2013 the "testing", which would be TRULY UNETHICAL. Posts: 41 Cheers.

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BFL. jpg

how do you define "scam" ?

some would say that paying for some thing and not getting it is a scam

others would say the use of twisting words to not have to give some thing that was promised was a scam

others may say that changing the words "no we wont fulfill you" to "yes we we intend to some time" is a scam

but all of these people agree on one thing, that not getting a product that was purchased is a scam.

So im curious what boat you are in that there is doubt?

Maybe its the "im lazy and dont mind waiting as i can always get a refund if need be" boat?

I know that boat is a bit behind the "I use refunds instead of charge backs cause I have no pride" boat

but seriously, how do you justify that there is a doubt here? Is it just that they didn't tell you its a rip off and told you to wait instead ?

Is that where the doubt lies ? Im just really trying to understand in an effort to better help people through the process.

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Is BFL Scamming Us? Page 4 of 9

Send PM Reply With Quote 05-25-2013, 09:57 PM #5 © @@ Originally Posted by J m Junior Member a es I've seen the same thing happened in other pool. 2

users with 359 Gh/s (ouch!!) and it was a new user

well if you think they were scamming us you can think this possibillites

- they used our money to produce the rig

- then they used the rig to mine for themselves (cloaked as testing unit)

- when we ask for refund they'll gave us refund from

Mentioned: 0 Post(s) Tagged: 0 Thread(s)

| oe their mined BTC Latest Thread: Avatar Upload Error - after that they can happily continue to mine with ex ee ® our money being a kickstarter Join Date: + May 2013 isi’ join Date: jay 7 Location: Orlando ica! Posts: 16 don't get me wrong, I'm also “pre"- ordered jalapen Ignore User so we are in same situation here ®). in short this scheme can be the best scamming scheme ever (no don't do it BFL i have faith in you even with it being eroded as time ticking) Next level ponzi scheme how you guys think ? Sounds like a smart idea. But don't confuse the words scheme and scam. They're not the same. [url=http://btcspender.com]Local Locations That Accept Bitcoins - BTCspender.com[/url] Send PM Reply With Quote 05-26-2013, 05:22 AM #6

7: @ Originally Posted by I m

Miner 49"

pra nc I've seen the same thing happened in other pool. 2 Mentioned: _ 5 Post(s) users with 359 Gh/s (ouch!!) and it was a new user Tagged: 0 Thread(s) Quoted: 240 Post(s)

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 27 of 71 https://forums.butterflylabs.com/bitcoin-news-and-articles/2756-bfl-scamming-us.html?hig.... 11/3/2014

Is BFL Scamming Us? Page 5 of 9

Latest Thread: Butterfly Labs I'd be interested in how many blocks they actually solved. Announces Bulk Chip Sales They might just be exploiting the pool and not actually ex 8 ® hashing anything. Join Date: Apr 2013 Posts: 516

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Send PM Reply With Quote 05-27-2013, 11:29 AM #7 ta? SLok" Says one Frizz to the other Frizz: "hey Frizz, look here", mae says the other : “omgwtfbbq"! On which a third Frizz a . reacts: " and ' You must be geniuses"! And all the chilled, and were happy for some days, again.

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Reality checkpoint approaching...

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Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 28 of 71 https://forums.butterflylabs.com/bitcoin-news-and-articles/2756-bfl-scamming-us.html?hig.... 11/3/2014

ATTACHMENT F

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 29 of 71

Is this True???? "NOTICE: WARNING to NEW CUSTOMERS of BUTTERFLY LABS ... Page 1 of 8

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Thread: Is this True???? "NOTICE: WARNING to NEW CUSTOMERS of BUTTERFLY

LABS INC (BFL) Thread Tools Display 06-09-2013, 09:38 AM #1 P=! Is this True???? "NOTICE: WARNING to NEW a CUSTOMERS of BUTTERFLY LABS INC (BFL) Mentioned: 0 Post(s) Would sure like to see BFL comment on this.... Tagged: 0 Thread(s) Quoted: 78 Post(s) Latest Thread: Ask for a refund for my 4 orders.. Now we will see BFL's NOTICE: WARNING to NEW CUSTOMERS of #1 true colors... BUTTERFLY LABS INC (BFL) e e » e June 08, 2013, 03:50:45 PM

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** Warning to New customers of Butterfly Labs Inc (BFL) *x

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 30 of 71 https://forums.butterflylabs.com/off-topic/3 157-true-notice-warning-new-customers-butter... 11/3/2014

Is this True???? "NOTICE: WARNING to NEW CUSTOMERS of BUTTERFLY LABS ... Page 2 of 8

"Any pre-orders placed now for any of Butterfly Lab’s units are not expected to ship until early 2014."

The above warning is from an article of June 5th on Butterfly Labs by Bitcoin commentator, Phil, in Mining News of the leading Bitcoin website, the Genesis Block.

This warning is intended for new customers thinking of placing an order in the near future with butterfly labs Inc (BFL) for mining equipment. It is not intended to be of concern to existing customers with pre-orders, and also it relates to ASIC mining equipment only as opposed to ASIC chips for whic BFL may have a different promised delivery schedule.

Quote

Butterfly Labs claims they have shipped all Jalapeno 5 GH/s ASIC bitcoin miners ordered through July 3rd, 2012 have been shipped. ASIC miners are customized hardware used for bitcoin mining. Although Butterfly labs was one of the first companies to take pre-orders for ASIC hardware, Avalon and ASICMiner have been shipping for several months now.

Butterfly Labs has been plagued with power issues for months, perpetually telling miners they are two weeks away from delivery. They missed their power target, forcing them to forfeit 1,000 bitcoins to charity after a failed wager. The size of these 5 GH/s miners is over twice as big as originally forecast to accommodate the redesigned boards.

There is no word yet on expected deliveries of their 30 GH/s, 60 GH/s or 1,500 GH/s miners shipping yet. These units are expected to have similar size issues as the 5 GH/s miners and there are rumors that Butterfly Labs will ship multiple units to customers in order to achieve the expected hashing rate. Certainly, after a year of waiting, most customers will be happy to just start mining. Any pre -orders placed now for any of Butterfly Lab’s units are not expected to ship until early 2014.

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06-09-2013, 09:43 AM #2 eo | Lies, they are making over 400 jalapefios every 5 hours alan Manabe ae to Josh. They will probably clear the backlog by

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 31 of 71

https://forums.butterflylabs.com/off-topic/3 157-true-notice-warning-new-customers-butter... 11/3/2014

ATTACHMENT G

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 32 of 71

Refund Request - Update - Butterfly Labs email message to a customer asking a refund! - ... Page 1 of 7

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Thread: Refund Request - Update - Butterfly Labs email message to a customer asking a refund!

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03-11-2013, 09:35 AM #51

Originally Posted by i co

Senior Member . P : ive This was mentioned repeatedly on Chinese forums.

The Batch numbers you are taking into account are overseas orders.

https://bitcointalk.org/index.php?to...570#msg1557570

They register on avalon store site first and make an order. Then they use that order # to place same order on Taobao and use that site to pay for it instead of using bitcoins. Taobao is China's version of E-Bay.

Mentioned: 6 Post(s)

Tagged: 0 Thread(s) 300 is the total for batch 1. Quoted: 510 Post(s)

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11/3/2014

Refund Request - Update - Butterfly Labs email message to a customer asking a refund! - ... Page 2 of 7

Latest Thread: TerraHash Folds!!! Like Said: eee 300 x 67 = 20.1 TH/s

1300 x 67 = 87.1 TH/s - we have not seen anywhere near

Join Date: Feb 2013 this

Location: Canada

Posts: 1,141 Late Dec - early Jan, peak was around 26 TH/s. Network

Ignore User now peaked at 40 TH/s and that includes ASICMiner coming in with 6 TH/s. 40 - 26 = 14 TH/s higher with ASICs.

Bitcoin Hash Rate

Send PM 03-11-2013, 12:40 PM #52 ta? BFL_Josh ‘ge So more lies from PuertoLibre then is the general een consensus, since he's basically the only person on the aed planet to have heard of this 1000 Avalon army thing? Blog Entries: 13

Mentioned: 183 Post(s) Tagged: 1 Thread(s) Quoted: 2112 Post(s)

Latest Blog: Monarch Power and Light (Sound)

Latest Thread: Duplicate IP Report for 10-26-2014

Join Date: Aug 2012 Posts: 2,505 Blog Entries: 13

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03-11-2013, 12:52 PM #53 | He mixes dreams with reality.

Junior Member

Mentioned: 0 Post(s) Tagged: 0 Thread(s) Quoted: 3 Post(s)

G ee °@ 3) Join Date: Oct 2012

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Refund Request - Update - Butterfly Labs email message to a customer asking a refund! - ... Page 3 of 7

Posts: 26 Ignore User Last edited by JJ 03-11-2013 at 01:25 PM. Send PM 03-11-2013, 12:59 PM #54 ie? @ ars @@ Originally Posted by Employee I should point out that Avalon sold 1000 units within Batch 1 (in China). less FUD please, there's total of 300 units for batch Blog Entries: 13 one, -/+ 10. this includes in china. fun fact: we Mentioned: 183 Post(s) rejected 2x 100+ orders and a deal to buy the whole Tagged: 1 Thread(s) 300 unit lot. Quoted: 2112 Post(s) og . Latest Blog: Monarch Power and cc : : Light (Sound) sorry about the DHL delay guys, since we are doing

Latest Thread: Duplicate IP Report shipping through another company we get the

for 10-26-2014 es ee ®

tracking a few days after we ship, and due information being passed through multiple parties, it is entirely possible you'll receive units before tracking Join Date: Aug 2012 information, which is currently what is happening.

Posts: 2,505 Blog Entries: 13 Yep... PuertoLibre - Lying Scumbag extraordinaire.

Ignore User Send PM 03-11-2013, 02:15 PM #55 = Is this the official response from the representative of 1? - Member Beer Mentioned: 1 Post(s) OMG Josh, you can't say that! It's so unprofessional! You Tagged: 0 Thread(s) are supposed to be representing your company! Are you Quoted: 20 Post(s) mixing up your online personas? Josh, please delete

and/or apologize for this behavior. It's bad bad bad for

Latest Thread: combined monarch - your corporate image.

upgrade and voucher code. Go e 8 G

Join Date: Oct 2012 Posts: 39

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Refund Request - Update - Butterfly Labs email message to a customer asking a refund! - ... Page 4 of 7

Send PM 03-11-2013, 03:30 PM #56

zz. @@ Originally Posted by 7 o

Senior Member :

0 You are supposed to be representing your company! Mentioned: 3 Post(s) Are you mixing up your online personas? Josh, Tagged: 0 Thread(s) please delete and/or apologize for this behavior. It's Quoted: 119 Post(s) bad bad bad for your corporate image.

Latest Thread: To trolls and those who are lazy to ‘search’

eeee iy There are too many ‘exasperated utterances’ (Google Join Date: Feb 2013 translated, hope it is correct) in the last few days. Lets Posts: 359 calm down pls. ALL OF US Ignore User Send PM

03-11-2013, 05:42 PM #57

es @@ Originally Posted by BFL_Josh gy

ida Member

Yep... PuertoLibre - Lying Scumbag extraordinaire.

Mentioned: 5 Post(s) Tagged: 0 Thread(s)

Quoted: 59 Post(s) and Josh promising wrong delivery dates since october is Latest Thread: So Josh is stepping an angel instead of scumbag? Whats the difference? Didnt down?...... U read and understand my last post here? If U treat

@ ee @ customers like this....soon U will have no customers (NB,

as U can see, I wrote again U not You). Join Date: Oct 2012

Posts: 161

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03-11-2013, 07:14 PM #58

faa @@ Originally Posted by I ca

Guest

and Josh promising wrong delivery dates since october is an angel instead of scumbag? Whats the

difference? Didnt U read and understand my last post here? If U treat customers like this....soon U will have no customers (NB, as U can see, I wrote again U not You).

not to defend josh's promising a future shipping date. a possible lie and most likely over optimistic at best.

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Refund Request - Update - Butterfly Labs email message to a customer asking a refund! - ... Page 4 of 10

03-12-2013, 03:39 AM #65 ta? po BFL_Josh @@ Originally Posted by J co Empl CL LL Luckily or unfortunately I'm not Frizz. On bitcointalk I'm not really posting, just looking/checking 1 thread and if someone gives me link, then look at that too. I dont even know what subforums they have, havent been on main page for half a year or so Bl ae I am BFL orderer who ordered in summer, was iog Entries: 13

hoping to get them on october/november at the latest. If You would have stated that time, that You cant deliver in october and will be waiting for

Mentioned: 183 Post(s) Tagged: 1 Thread(s)

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Quoted: 2112 Post(s) march/april, then I would not made my order (and I

OG bet many others too). Instead BFL kept pushing

Latest Blog: Monarch Power and deadlines week after weeks. Right now its alr eady

Light (Sound) TOO LATE to back out. But if its BFL-s official

Latest Thread: Duplicate IP Report statement, that it goes another 6 months and I

for 10-26-2014 would get them in september/october this year, then e @e@ee@ I would ask for refund and put my money elsewhere.

Join Date: Aug 2012 Posts: 2,505 Blog Entries: 13

Good to know you're not Frizz, or if you are, you've managed to out do yourself this time. If we had known it Ignore User would be March before we delivered, we would have posted March. We gave the best timeline we had at the time. Why is that so hard to understand? It's never too late to back out in this context.

As for so called "trolling." What ticks me off, is You being "bossy" to Your clients and customers. There are different kind of people, but You as a company representative cant behave like that (calling them

scumbags, renaming threads to DUMB questions (yeah, he had some info there wrong, but he had right info there too, along with not getting refund for 10 days) and all other stuff).

I absolutely assure you that I can, have, and will. You are sorely mistaken if you think political correctness will protect you from being stupid. I have said this before, a number of times, but the customer is not always right. Some customers cost more to retain than to jettison and some companies are so stuck in the mentality of "The customer is always right." that they will do stupid things to retain a customer that ends up costing more than they are worth. Using an example of Gundan, coming here and posting false information repeatedly (like you are doing) typically ends up costing more in terms of my time, everyone elses time and potentially even lost sales than you generate with your orders. As such, it's better to be rid of a customer like that than to retain them.

I would not say I am bossy, I am just intolerant of childish behavior and whiny, entitled people. I'm sorry that I'm not holding you hand and telling you nice flowery things. I am telling you the truth and if you don't like it, you need to move on.

Bank transfers within a bank takes 1 minute, international transfers 2-3 days, but to let people wait so long....that pushes them over the edge. Be more polite to people, and they will be polite against You (except SOME exceptions, right now its more

than that). And really, website with orders showing should of been up in october, but You started of thinking of it in february and its middle of the march, and its still not up. And thats a false information?

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Refund Request - Update - Butterfly Labs email message to a customer asking a refund! - ... Page 6 of 10

| btw only joke I liked, was that here is a quarter, get acue®

You apparently haven't been around long enough to understand this business. Bank Transfers do not take 1 minute, they are one of the most time consuming financial activities we conduct. Being polite to people, when they are being rude and demanding may work with some of the people, some of the time, but it does not work with all of the people all of the time, or even most of the time. In fact, if you are going to be rude and impolite, you will get the same in return. See above about the customer not being always right. Posting false information as fact is the height of rudeness.

Also, you don't need to capitalize "you," unless it’s at the beginning of a sentence. It's not a proper noun. I have enough respect for the people I communicate with to take the time to use proper grammar, spelling and complete sentences (most of the time), at least have enough respect for your audience to type complete words, if

nothing else. Send PM 03-12-2013, 04:17 AM #66 aaa one pn as Member

Mentioned: 0 Post(s) Tagged: 0 Thread(s)

Quoted: 2 Post(s) I've got to say, reading some of these infantile posts is eeee just painful. I don't know whether bitcoin and speculative ventures attracts these sort of people, or what, but it's Join Date: Feb 2013 really irritating to read obnoxious, poorly written, and Posts: 7 poorly thought out complaints with such an arrogant sense

Ignore User of entitlement. Though, that said, I agree in part that Josh you could do a little better in the PR department, I understand you guys are a small company and probably don't have much experience in this area, but when dealing with customers on a public forum it's best to keep things short, to the point, and not take anything personally.

Don't respond emotionally, a simple response such as: "Please understand the delays have been unavoidable, we apologise for the inaccurate target date, however, we will not compromise on our product and will continue with our plan of assembly and testing prior to shipping to the consumer. It is the nature of business that a smaller companies project (BFL ASICs) can be delayed at the manufacturing level by a larger company (etc, etc,

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Refund Request - Update - Butterfly Labs email message to a customer asking a refund! - ... Page 7 of 10

whatever the other reasons are). We remind our customers that if they are unsatisfied with our service they are entitled to a refund, however, as we approach the shipping date we would encourage our loyal customers to be patient while we finalise the first batches. All refunds will be processed in a timely manner, however, depending on the method of payment may take up to 5 business days to clear."

Etc, etc.

In my experience, BFL should carefully note down the feedback they're getting and constant questions. Set out a refund policy since there's been a bit of talk about it, post it up on the website, and whenever it is mentioned in a post, respond simply with "please see our updated refund policy at |LINK|".

Simple. I've seen a few posts that look like they were written by children criticising the delays and processes, even if these criticisms are legitimate the responses from BFL should always be short, to the point, and professional. They should be completely impartial and speak on behalf of the company, not on behalf of an individual.

Send PM 03-12-2013, 07:36 AM #67

oe ae _ @@ Originally Posted by I m

junior Mem!

i) Lying is when you know the truth, and you say Mentioned: 1 Post(s) something else.

Tagged: 0 Thread(s) , ; ;

Quoted: 9 Post(s) A promise is where you state your intentions for the Latest Thread: BFL PSU dead future. BFL honestly intended to ship a long time looks like fried 32 cap. ago; it doesn‘ retroactively turn into a lie if Suggestions? something goes wrong.

Join Date: = Nov 2012 Gullible is when you believe everything you are being Posts: 25 shoveled, stupid can be defined as someone knowingly Ignore User doing whats in their worst interest and characteristics of

insanity is doing the same thing over and over again and expecting different result.

Since we are done with the word-lessons I figured I would summarize. Missing 1 date does not turn you into a liar nor does missing 10 if you provide a believable explanation. Missing 30+ (arbitrary number pulled out of the air based on a general feel of the amount of "estimates" that have been missed - I think 30 is low) should start some kind of through process in most individuals that are not stupid nor gullible that something is strange here and that far from everything is above

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 40 of 71 https://forums.butterflylabs.com/bfl-forum-and-miscellaneous/1266-refund-request-update... 11/3/2014

Refund Request - Update - Butterfly Labs email message to a customer asking a refund! - ... Page 8 of 10

board. E.g: One dramatized explanation for delay and lack of information - Phone's don't work on Presidents day.

Thirty time estimates missed should also start some kind of process in the company representative in which he/they "salts"/increases the "expected" estimates since doing anything else would be insane or deliberate. This increase would be based on previous encounters with similar problems and they don't necessarily have to be the same (ASICs - new science - warp drive - yada yada) field. My opinion here is obviously that it is deliberate, but I could be wrong. If you can't think of why it would be deliberate in a competing (wattage aside) market where difficulty is everything then chances are you bear a close relation one of the three previously "defined" words.

@@ Originally Posted by BFL_Josh gy

Also, you don't need to capitalize "you," unless it's at the beginning of a sentence. It's not a proper noun. I have enough respect for the people I communicate

with to take the time to use proper grammar, spelling and complete sentences (most of the time), at least have enough respect for your audience to type complete words, if nothing else.

Are you kidding? You have enough respect to take the time to use proper grammar, but you don't find what you are doing (to more than one person) right now to be disrespectful and demeaning? You are being paid for this, you are not a saint sir. Part of your job (if I'm not massively misinformation) is to be a community liaison, to communicate with us and give us timely updates, not to fucking correct our English. Part of your job is "kind of" to have better language and social skills than most of us, you display some and seem to lack the other.

I have no clue about whether this guy is from an English speaking country, but what kind of signal do you think you send to those that write worse than him? English is my third language, does that mean that I have to be extra careful when coming to the forum if you are online or if you're in a bad mood?

Come on man, you can, and you have, handled this better.

Send PM

03-12-2013, 11:19 AM #68 ta? BFL_Josh ‘@o This thread has ceased it's useful life, so I am closing it.

Employee

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 41 of 71 https://forums.butterflylabs.com/bfl-forum-and-miscellaneous/1266-refund-request-update... 11/3/2014

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Send PM Reply With Quote 06-09-2013, 11:59 AM #8 tripjammer © March and April is only too late if you ordered a mini rig,

but even then I bet BFL could get all 100 or so of the mini rigs out in less than 2 months.

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Send PM Reply With Quote 06-09-2013, 12:05 PM #9 te? BFL_Josh @o Yeah whomever wrote that is a liar and fairly laughable. So

Employes much for journalistic integrity.

All current back orders will hopefully be shipped by the end of August/beginning of September.

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Results 1 to 10 of 162 Thread: Refund Policy? Thread Tools Display 07-04-2013, 12:42 PM #1 i: Refund Policy? Banned u - Mentioned: 0 Post(s) Hi, : : Tagged: 0 Thread(s) Thank you for contacting Butterfly Labs. According to Quoted: 7 Post(s) the terms you agreed to on checkout, all sales are : . : final. Now that shipping of orders has begun, refunds

Latest Thread: Refund Policy? 4

ial ign will not be processed. Your order will be shipped per

eseee- your position in the order queue. Thank you for your Join Date: Jul 2013 patience and understanding. Posts: 10 For Jody's Customer Service Blog, and more, please

visit our new BFL Forums at Ignore User <https://forums. butterflylabs.com/blogs/bfl_jody/> Kind regards, Alicia BF Labs, Inc.

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 45 of 71

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11/19/2014

Refund Policy? Page 2 of 8

This is Order #100051123 for a Single. Time to delivery stated at the time was 2 months. 2 months later BFL is oer now shipping June 2012 oe so I requested a

I have also filed a complaint with the Federal Trade Commission.

Best Regards.

Update: Received refund. Case closed.

Last edited b JJ 07-27-2013 at 09:02 PM. Reason: Update

07-04-2013, 03:16 PM #2 '8? BFL_Josh Po All sales are final at this point. We are in full production, thus your orders are final. Employee

If you've filed a complaint with the FTC, then there's nothing I can do, you'll have to follow up with the FTC from here on out, as no one here can assist you with that. Please be sure to direct all correspondence to them in the future going forward.

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07-04-2013, 03:32 PM #3

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 46 of 71 https://forums.butterflylabs.com/pre-sales-questions/3675-refund-policy.html?highlight=r.... 11/19/2014

Refund Policy? Page 6 of 8

07-04-2013, 05:33 PM #10 ta? BFL_Josh @o To you whiners and complainers, you're welcome to do ——— whatever you think is best. I'm sure the people

maintaining their orders will be happy you step out the line.

@@ Originally Posted by A co

You've been shipping a couple dozen units a Few days a week for 2 1/2 Months now. You Can Not

expect people to Not ask for a refund once they realize they're screwed and will loose money by the

Blog Entries: 13 Mentioned: 183 Post(s)

Tagged: 1 Thread{s) time they get there product because it'll take you a snetes) over a year to ship them out...If you were REALLY OG shipping out like you were supposed to then you Latest Blog: Monarch Power and may have a leg to stand on but until then there is no Light (Sound) : way you can refuse people money back. You should noes Duplicate IP Report have stopped taking orders Months ago until you = i caught up on your Huge Backlog. Sad as it is there exes ®@ are far too many posts everyday of people who have . . No idea of BFL's situation and assume they'll be a -- getting their products they paid for immediately. Blog Entries: 3 Especially when you give these lofty goals that you i never even try to attain. Ignore User

Please stop spreading false information. It's getting kind of old. Unless you have proof to back up your claims, stop. As for people expecting to get their products immediately, we can't make it any more clear than "You will receive

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 47 of 71 https://forums.butterflylabs.com/pre-sales-questions/3675-refund-policy.html?highlight=r..._ 11/19/2014

Refund Policy? Page 7 of 8

your product in two or more months..." when they place an order. It's not like we are hiding that information in small type and on an obscure page.

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#119

08-23-2013, 10:34 AM

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The sale is over when I get my miner....not before.

Feed me Beer BTC: 1GQDZRAqxCHWcXGwXVQZZxJmMBFkstFuR4

or feed me Luke-warm flat beer LTC: LeidafLbPyQS2AbEbbwbOQfigf7JcM7f3Ap

08-23-2013, 03:42 PM #120

BFL is censoring posts. Two of my posts now have not been posted after review. They did not contain profanity, they only contained the law and how it applies to how BFL is not giving refunds. Anyone else find this censorship

pa I .

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concerning?

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08-23-2013, 03:44 PM #121

jis _=)§ Wow, after deleting a bunch of my posts, I added another

ecco which took up less space and Josh deleted that as well. How about BFL starts obeying the law and stops deceiving

Mentioned: 0 Post(s) its customers as to their rights?

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| 08-23-2013, 03:46 PM #122 |

a: Apparently now if your posts contain the letters "F" "T" and then "C" they will not be posted. Wow...

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Mentioned: 0 Post(s) Edit: It actually must be the word "refund" that is flagged

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08-23-2013, 03:52 PM #123 a - @€ Originally Posted by BFL_Josh gy Junior Member a oe You purchased a pre-order, you received a pre-order, Mentioned: 0 Post(s) sales over at that point. You will get your product Tagged: 0 Thread(s) when it becomes available. Quoted: 10 Post(s) Latest Thread: (2) 50 gs/s miners not working after DAYS of trying so, to be clear, you are CONFIRMING the completion of the

eeee sale on receipt of payment? is that correct josh? Join Date: Apr 2013 Posts: 26 Ignore User Send PM 08-23-2013, 03:58 PM #124 | @@ Originally Posted by J co

Miner 49'er : u so, to be clear, you are CONFIRMING the completion Mentioned: 0 Post(s) of the sale on receipt of payment? is that correct Tagged: 0 Thread(s) Josh?

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Latest Thread: EclipseMC Saw a —_ 3TH Jump Over the Weekend He can't confirm that because it isn't true. On your order

eo ee 5 confirmation, the subject line reads: "Your order from BF

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ATTACHMENT I

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Shipment expectations - email from BFL Page 4 of 7

04-09-2013, 08:08 PM #6 ae - @@ Originally Posted by I co Membe: a. . Indeed, we shall... As a new customer, I am willing Mentioned: _ 0 Post(s) to give the company the benefit of the doubt. It Tagged: 0 Thread(s) seems like they are very close to getting things done. Quoted: 14 Post(s) BTW, I've read your shipping estimate article - the Latest Thread: Mini-Rig Nexus math looks right, however one question (and I : apologize if it's already answered elsewhere) - where eoese did the number 400 units/day production throughput Join Date: Oct 2012 come from? Posts: 44 ti hahahaha.... I had to laugh when I read that part "It seems like they are very close to getting things done." It might be true - this time - but that could have been easily said multiple times over the past four months. The only thing you can do is wait, and try to forget that they took your money. Otherwise, this company will drive you bat crazy. Send PM Reply With Quote 04-09-2013, 10:26 PM #7 a: @@ Originally Posted by J co Junior Member a —— 400 units/day was the number given by Josh (BFL). Mentioned: 0 Post(s) He said they made 100 FPGAs per day and would be Tagged: 0 Thread(s) able to do ASICs 4X faster. This is still unconfirmed Quoted: 7 Post(s) and just Josh's guess on unit assembly. Could end up ead being 250 or 200 units/day. Have to wait for real Latest Thread: Sh t sneedliae Prices BFL numbers. ie. 1-2 weeks of making ASICs.

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Shipment expectations - email from BFL Page 5 of 7

Join Date: = Apr 2013 Thanks for clarification. Now it all comes together. Posts: 11 Hopefully, once they start shipping out, they will see an Ignore User uptake in paying customers and can ramp up production. Honestly, I don't think I am willing to be as patient as many people here and wait for 10 months for an overdue product. It's nothing against BFL. In fact I like the company and can appreciate the difficulty of getting a new product to market. It's just economics of Bitcoin don't appear to allow for time loss when difficulty keeps going up. But for now, as I said before "the benefit of the doubt"... Send PM Reply With Quote 04-10-2013, 02:04 AM #8 | Brian must be new ... he should know better than to give E sareidiets out accurate information .... es F ; Mentioned: 2 Post(s) He'll be gone by Friday 6 Tagged: 0 Thread(s) : Quoted: 131 Posts) =~

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course troll master Frizz Supertramp/Nordsee leads the way, and the but-hurt club (but-hurt because the lot praised bASIC's attempt to an asic over BFL's and lost their money/wait for a refund) jump in. BFL should give you a free little single for best advertisement, the stupidity

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Thread: Why are BFL mods editing my posts to say things I did not say?

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09-20-2013, 12:27 PM #1

=a Why are BFL mods editing my posts to say things I did _ Member not say?

Does anyone think that it behooves BFL for BFL forum mods to be abusing the forum this way? How is BFL's credibility and public image regarding integrity, trust, and the abuse of trust? Good? Not so good? Good enough to have no need to consider how administrative behavior might affect these

Mentioned: 0 Post(s) factors presently? Just something to think about... Tagged: 0 Thread(s)

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lof 5 11/18/2014 11:09 AM

Why are BFL mods editing my posts to say things I did not say?

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09-20-2013, 12:42 PM

#2

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00

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IMHO it is only Slok who seems to enjoy harassing people in

this way.

Grnbrg has been a Mod for awhile and seems to be fair.

Nothing is more infuriating then to go back and see a post that is 2-3 weeks old, to see it now say that | am basically

calling myself a Whiner among other things. | agree w/ you in the fact it does nothing good for BFL in any way and only

tarnishes their Reputation and the way they treat their Customers even more.

09-20-2013, 04:53 PM

(a? BFL_Josh &

GUbB aE

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Can you guys point out examples of what you are talking

about? This is the first I'm hearing of it? What's the problem?

09-20-2013, 04:57 PM

#4

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11/18/2014 11:09 AM

Why are BFL mods editing my posts to say things I did not say?

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09-20-2013, 05:46 PM

https://forums.butterflylabs.com/bfl-forum-and-miscellaneous/5004-why-...

@@ Originally Posted by I m

Does anyone think that it behooves BFL for BFL forum mods to be abusing the forum this way? How is BFL's credibility and public image regarding integrity, trust, and the abuse of trust? Good? Not so good? Good enough to have no need to consider how administrative behavior might affect these factors presently? Just something to think about...

I changed your comment to an OP from "you must lay down your crack pipe" to "I must lay down my crack pipe”. If you do not appreciate such actions, don't use comments like that. BFL's forum is not bitcointalk.org where all goes.

And dagger, get a life, cancelled your orders but keeps hanging around coz there's no better place to be?

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09-20-2013, 05:54 PM

I have no idea why BFL made Slok a forum admin. He is one of the most devious persons I've met in the Bitcoin world so far.

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8? SLok « Moderator vee]

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@@ Originally Posted by es

I have no idea why BFL made Slok a forum admin. He is one of the most devious persons I've met in the Bitcoin world so far.

As if you having an idea why would make any difference, lol.

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Announcement of Butterfly Labs 'Monarch' angers existing customers

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BUTTERFLY LABS + MINING - NEWS

Butterfly Labs Monarch miner announcement angers customers

David Gilson (@davidgilson) | Published on August 19, 2013 at 15:16 GMT

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Article updated on 27th August at 14:37 BST

Butterfly Labs has announced a new PCI bitcoin mining card, named Monarch, based on the new 28nm technology. Butterfly Labs claims the Monarch will achieve 600 GH/s and consume 350W. The release has courted controversy with customers who are still awaiting delivery of their longstanding 65nm-based products.

The Monarch has been optimised to work when connected to a PCle slot, however, it also has a USB port, which allows it to be used with Windows and Linux computers and even Android devices. Butterfly Labs boasts that the card will achieve 600 Gigahashes per second (+/- 20%), and will cost $4,680 ($7.80 per GH/s), and consume 350 Watts (0.6 W per GH).

It's fair to say that Butterfly Labs has earned a poor reputation because of its consistently late deliveries. For example, its first-generation entry-level miner, the Jalapefio, was eventually delivered to customers six months after it was supposed to ship (promised November 2012, started shipping April 2013). The Bitforce 500 and Bitforce SC 60 were also released earlier this year, falling short of their projected specifications. Butterfly Labs is stil! struggling to keep up with its massive list of backorders, however, some customers are receiving new hardware:

& aa Follow c

My upgraded Bitcoin-Miner with new hardware from @ButterflyLabs :)

12:11 PM - 16 Aug 2013

2 RETWEETS

Butterfly Labs makes a point of stating on the product page that this mining device will not be

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Announcement of Butterfly Labs 'Monarch' angers existing customers

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shipping any time soon, but "towards the end of the year". It further states that those not comfortable waiting for so long should not pre-order.

http://www.coindesk.comybutterfly-labs-monarch-miner-announcement-...

A BEGINNER'S GUIDE TO BITCOIN

For those interested in the product, Butterfly Labs has an offer for customers who are waiting for Bitcoin is a digital currency that is being used increasingly 65nm miners to transfer their current orders and apply the credit towards the Monarch. The catch all over the world. Find out more about how It works and is that doing so will be subject to a 10% transfer fee. how you can use it with our straightforward guides. This has understandably raised the ire of many existing customers: Vhat is Bitcoin? ?s a decentralized digital currency > io Nhy Use Bitcoin? t's fast, cheap to use, and secure >

@butterflylabs your priorities are wrong stop doing more gear and ship our old orders... upset about. butterflylabs.com/monarch/

3:13 PM - 18 Aug 2013

TRETWEET 2 FAVORITES

Recent months have seen Butterfly Labs customers being refused refunds, which has further 66

added to anxieties of those with large sums of money tied up in products that have not yet arrived.

For example, a Bitcoin forum user reported: "I just tried to get a refund and they refused. They should be tagged as a scammer as previously posted, especially now that they are refusing refunds (confirmed). They just refused mine in an email."

Then, on Butterfly Lab's forum, a user reported the following response from the company: "As stated on the order form, all sales are final. Unfortunately, we cannot give you a refund. We truly do appreciate your business.”

There has even been the cancellation of a group-buy on the Bitcoin forum: "Ugh... | just read through the forum and the general consensus about this third BFL preorder is rather negative. | will stop this attempt of a group-buy before it even starts to minimize anger/grief/etc."

Further to the “all sales are final" position, Butterfly Labs is not accepting PayPal as a method of payment for the Monarch; instead, only taking bitcoin or bank transfers as payment. Both of these are irreversible payment methods.

We asked Butterfly Labs COO, Josh Zerlan, about the company's refund history and he told us: "Throughout that whole process, we gave customers the opportunity to cancel and get a full refund, culminating with a positive opt-in email where they had to agree that they understood we've screwed up the timeline and still want the product, otherwise we would cancel their order and refund their money, they wouldn't even have to do anything if they wanted a refund as we'd do it automatically."

Zerlan also explained the lack of PayPal as a payment option for the Monarch: "We do accept Paypal, just not on the Monarch. When you start doing Paypal transactions over a certain amount, it gets more complicated, which is why we elected not to do PayPal with the Monarch at it's nearly $5,000 price point. We still accept PayPal for all of our other products though."

What do you think about Butterfly Labs? Have you received your hardware yet or are you still waiting? How have you found its customer service? Let us know in the comments.

ASICs Butterfly Labs

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11/19/2014 9:10 AM

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2015

Cryptocurrency mining hardware designer KnCMiner is planning to deploy its next generation ASICs in early 2015.

Nov 4, 2014 at 17:06 | Pete Rizzo

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Embattled mining hardware company Butterfly Labs has filed a court motion to dismiss a Federal Trade Commission complaint.

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 64 of 71

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Announcement of Butterfly Labs 'Monarch' angers existing customers http://www.coindesk.conybutterfly-labs-monarch-miner-announcement-...

Comments for this thread are now closed.

48 Comments e

Py It seems outrageous hat they want a 10% cut of the credit you have with them just to change an order. They also don't seem to grasp the concept that "all sales are final" only takes place when the sale happens - which is when money has been exchanged for a product. Until the product has been accepted by the customer, the sale has not been consummated.

es | believe me is the word you are looking for Dave as in "the sale has not been concluded"

Be oe

Consummated. It's a legal term for the completion of both parties' performance of their part of a contract. If only one party has performed their part, the sale has not been concluded.

Ed Thank you, andj. | stand corrected. Unfortunately | was labouring under the colloquial definition/usage of the term consummated.

a= 2

To bring to completion or fruition; conclude: consummate a business transaction.

http:/www.thefreedictionary.c...

Butterfly has consistently failed to deliver. When you have a backlog of orders and angry customers you do not prematurely announce a product that you have no estimated delivery time for. To make matters worse, they are allow customers to switch over to this new "intangible" product for preorders and they are charging a fee for it?

It sounds like greed to me. The company can see that it's customers have lost faith and investment dollars are not coming in, so this is a new scheme to pull additional money out of their dwindling consumer base.

The best way to get a feeling for Butterfly Labs is to go on the bitcoin talk forums and look for posts by Josh Zelan (forum handle Inaba). Josh is a representative of Butterfly. When you see firsthand the way he degrades his customer base and the lack of customer service you will certainly be able to come to your own conclusions about their business practices.

Fase | would personally be more willing to take a chance on one of the new companies that hasn't delivered, or even tested it's chips than take the chance with BFL at this point.

Yep KNC ~e nice...

py one of us! one of us! one of us! :-D

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14

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Butterfly Labs to Resume Limited " msocree | Business Operations

Pete Rizzo (@pete_rizzo_) | Published on October 3, 2014 at 02:35 GMT FEATURES

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PS Blockstream: $21 Million ay Funding Will Drive Bitcoin Development Embattled bitcoin mining manufacturer Butterfly Labs has announced that it will resume limited business operations following discussions with the Federal Trade Commission (FTC).

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Business Online The Missouri-based company will not be allowed to

serve new consumers when it reopens, and will be restricted to fulfilling existing customer orders. } Butterfly Labs further confirmed it will remain under

the direction of a court-appointed receiver who will oversee the business.

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Butterfly Labs suggested that it aims to use this opportunity to rebuild its market perception, which it acknowledged has been impacted by the recent FTC actions.

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The company wrote:

"Butterfly Labs views the order as a promising sign for the future of our company, our

customers and our employees. This lawsuit has severely damaged our reputation "| Love the Blockchain, Just

and it is up to Butterfly Labs to attempt to repair that damage." oon The announcement follows a report from The Kansas City Star that suggested Butterfly Labs was holding initial discussions with the FTC about reopening its business earlier this week. MUST READ MOST POPULAR

However, the actions by the FTC may not be a validation of the company and its efforts. In past filings, the FTC has indicated that Butterfly Labs should be awarded ancillary relief only as necessary to reduce the likelihood of consumer injury.

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Seized from Ross Ulbricht The company wrote:

7 Coinbase Launches ‘One-Click’ Bitcoin Sw Tipping Tool

"There are a number of unsubstantiated claims circulating about Butterfly Labs. We

intend to address all inaccuracies in due course, including the false claims around om Regulation Takes Center Stage at Bloomberg Bitcoin Event

burn-in testing and Butterfly Labs inappropriately mining bitcoins with customer iat

equipment. Third of Sites Seized in Operation Onymous Were 'Clones'

New documents in the case filed on 27th September levied such allegations against the company, suggesting that Butterfly Labs conducted extended testing of its machines after they were @ purchased by customers to profit from their production.

Case 4:14-cv-00815-BCW Document 166-2 Filed 11/19/14 Page 68 of 71

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The FTC has also claimed that Butterfly Labs employees profited from mining rigs that were returned by customers or left in company custody after the consumer was issued a refund.

Challenging times

Butterfly Labs ended its statements by acknowledging the furor around the company in recent weeks, thanking those who have stood by its business.

"Butterfly Labs thanks its many customers, employees and business partners for staying with us during this challenging time," the statement reads.

Prior to its shutdown, Butterfly Labs was besieged by manufacturing delays and customer complaints, however, it was an early market leader, having been in operation since 2010.

Butterfly Labs was formally shut down in late September following months of customer complaints that it failed to deliver products as advertised.

CoinDesk has reached out to the FTC for comment, but has not received an immediate response. Image via Shutterstock

Butterfly Labs Mining

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Butterfly Labs to Resume Limited Business Operations

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22 Comments CoinD

so when will money be retumed to customers they stole hardware from, and bitcoins from the machines they "bumed in" for several months?

Die already. You've poisoned this community enough BFL. You're no longer welcome.

so when will money be retumed to customers they stole hardware from, and bitcoins from the machines they "bumed in" for several months?

When you lie to someone to convince them to buy something, there's a word for that. It's called fraud. They belong in prison!

No, BFL, the FTC lawsuit doesn't make you look bad! Fraud makes you look bad!

If you are considering buying a miner DO NOT buy a pre-order. Are you sending my Monarch yet, which is around 100 times less profitable than when |

ordered it

And now they can continue to conduct an enormous amount of "burn-in testing" without having to worry about actually developing new products.

Actually, according to the interim order issued by the court yesterday (full text at http-//ia902308_us.archive.org..., they are specifically prohibited from doing any more bum-in tes ing unless explicitly allowed by the court. They are also prohibited from misrepresenting the potential yield or profitability of their (alleged) products and from taking any more pre-orders for items they do not actually have in stock.

The only "limited business operations" they seem to be allowed is the shipping of assembled, tested miners to customers who want them instead of refunds.

Not a very well-researched article by CoinDesk, overall.

The only way I'd EVER seek business with them again is if they repaid EVERY FREAKING cent they stole, went under new management, and ensured that it would never happen again. Sure, people make mistakes, businesses make mistakes, hell, and one employee could ruin an entire company.

Do | believe they should be punished by law? No. | don't believe they should get jail time, jail doesn't do anything.

However the free market will ruin them, as it should, until every victim feels that he/she has

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