Butterfly Labs: "FTC has taken a sledgehammer to a fly"

Butterfly Labs (BFL) came out swinging in its defense, according to recent court documents. The mining equipment manufacturer had been ordered shut down and placed into receivership by the Federal Trade Commission (FTC) over alleged fraud, pending trial.

The 9-page document, with fiery language and occasional typos, attempts to defend BFL and slams the FTC for its action. It draws attention to a claim that BFL had already been in negotiations with local authorities before the FTC got involved.

The document also states the company's intentions to bring witnesses for its defense. The names and complete contact information of four out of the five witnesses are listed. Three witnesses are from BFL's management team. Another is an accountant that worked with the company and ostensibly helped it improve internal controls. The other witness is unnamed, referred to as "Representative of the Johnson County District Attorney’s Office". This witness appears yet to be decided and "is expected to be either an attorney or investigator from the DA’s office."

In slamming the FTC, here are some quotable quotes:

"Plaintiff Federal Trade Commission (“FTC”), in what can only be termed an abuse of power, misled this Court into entering an Ex Parte Order. The FTC has engaged in a superficial and distorted investigation of BF Labs and its operations, personnel, accomplishments, and future."

"The FTC wants to destroy what it does not understand."

"In fairness, BF Labs is not beyond reproach (few startups in an emerging and cutthroat industry are), and there are regrets over how the company handled certain of its affairs over the course of its three year history."

"The FTC has taken a sledgehammer to a fly."

"The FTC’s inaccurate and distorted portrayal must be addressed in a court of law."