KnCMiner seeks to reassure customers amid delays, allegations of fraud

Community outrage directed at mining rig manufactures has intensified during the past few months, coming to a head in recent days

Community outrage directed at mining rig manufactures has intensified during the past few months, coming to a head in recent days as KnCMiner stands accused of multiple instances of wrongdoing.

Earlier this year, customers of Butterfly Labs (BFL) launched a class-action suit against the company over allegations of never receiving their orders or receipt after the promised delivery date. The later received, the more obsolete is the rig’s efficacy in today’s rapidly evolving mining environment. BFL customers also appealed to the Federal Trade Commission (FTC), claiming $1 million in missing orders. CoinTerra and other suppliers have also been sued on similar grounds.

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In KnCMiner’s case, customers have accused them of sending faulty equipment, not fulfilling orders, not processing refunds and threatening/censoring customers speaking out. There is no shortage of material on Bitcoin-related forums. In one thread on KnCminer’s own forum, nearly $200,000 in total refunds from April and May are claimed to be outstanding.

Customers have not appreciated “Plan B” offers of “free” mining on their behalf while they wait for their equipment.

The more vindicating views note the following: ASIC manufacturing is a tough business. If everything goes well, it takes several months from design to “tape-out”. Even large manufacturers often have to go through painstaking design changes if a minor glitch arises. A small company, already working with a low margin of error while trying to fulfill orders within 6 months, faces an even greater challenge.

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Orders are also often paid up front, via bitcoins, whose value can be highly volatile during the period of fulfillment. These payments fund the manufacturing of the equipment.

Those not as sympathetic are placing KnCMiner in the same bracket as BFL and beyond. They allege their refund queue as “completely fake”, underhanded changes to refund policy, poor explanations for equipment defects, and other cases of deliberately dishonest behavior.

KnCMiner sought to allay confusion by sending an e-mail with the following message:

“There has been a lot of confusion and anger with high-end Bitcoin mining rig companies across the blogosphere of late, with even the BBB getting involved in the case of one producer. This week, however, KnCMiner will be taking concrete steps to allay that industry anger and confusion by doing what so few in the high-end Bitcoin mining industry actually do: shipping.”

The coming weeks will tell if they make good on their promise.

The recent upheaval brings back memories of the MtGox collapse, as customers rushed millions in funds to the hottest Bitcoin ventures, but ultimately faced a mounting refund queue and still remain in the dark as to where their money went.

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