Court Allows Butterfly Labs to Resume Operations, Rejects FTC Claims Due to Insufficient Evidence

CoinDesk reports that the court handling Federal Trade Commission (FTC) claims against Butterfly Labs (BFL) has allowed the latter to fully resume operations, subject to some conditions.

The ruling rejected the FTC’s push to have BFL shut down completely. The FTC argued that BFL would continue to violate the law and defraud customers if allowed to operate. Judge Brian C. Wimes of the US District Court for the Western District of Missouri ruled that while the court “is troubled” by some of the evidence, it is insufficient.

One of the main FTC claims was that BFL falsely advertised their equipment to generate a positive return on investment. Google ads mentioning hashing speed did not mention profitability, and a profitability calculator on Facebook is insufficient to sustain the claim.

While the ruling does not necessarily absolve BFL of past grievances, it allows them to reopen for business - provided that they abandon the practice of requiring customers to pre-order equipment, payment that funds its manufacture. BFL also voluntarily agreed to provide the court with monthly reports on its commitments.

Control is thus removed from the court appointed receiver, which until now had the authority to manage the company’s finances.

The capacity in which the company can now operate is a far cry from what it was previously, when they were only authorized to settle existing orders but not solicit new business.