FTC to flog Butterfly Labs' Bitcoin holdings

Orderly liquidation to help fund possible refunds

Bitcoin bloodbath

The US Federal Trade Commission has stuck another pin through Butterfly Labs, obtaining a court order that the company hand over any Bitcoins it had mined for itself.

The company had promised potential customers that its US$29,000-plus servers would embiggen punters' Bitcoin wealth to wildest-dreams level. It turned out to be selling more dreams than servers, and the FTC closed it down for accepting between US$20 million and US$50 million worth of pre-orders for kit it never shipped.

Now, in the US District Court for the Western District of Missouri, the FTC has obtained an order authorising it to sell Butterfly Labs' Bitcoins.

The order (PDF) was granted as part of the receiver's process to try and liquidate the company's assets to hopefully provide some refunds to buyers.

That includes “Conversion of Receivership Defendant’s substantial Bitcoin holdings to cash on a systematic and reasoned basis”, the order states, adding that all parties have to “cooperate in transferring Receivership Defendant’s Bitcoins to a Court-controlled Bitcoin wallet, under the direction and supervision of Temporary Receiver. Temporary Receiver may hire independent professionals and/or contractors, as he deems necessary, to ensure safe and secure transfer of Bitcoins”. ®

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