FTC Shuts Down Bitcoin Miner While PayPal Embraces the Cryptocurrency
The Federal Trade Commission takes aim at Bitcoin mining company Butterfly Labs, while PayPal embraces the emerging cryptography.A pair of recent incidents show how much the Bitcoin environment has changed from a hobbyist activity to something significantly more serious. The U.S. Federal Trade Commission is now responding to complaints about Bitcoin vendor claims while PayPal, itself an innovator in online payments, is now embracing Bitcoin as well. In the early days of Bitcoin, it wasn't terribly difficult for an individual to build their own system to mine for coins. Bitcoin, which is an emerging digital form of currency, is created through the action of individuals using computational power to "mine" for Bitcoins. As the number of miners increased and more Bitcoins were created, the computational complexity also increased. That complexity led to the emergence of dedicated hardware systems, often built with ASICs (application-specific integrated circuits) to expedite and optimize the mining process. One of the hardware vendors building Bitcoin mining machines is Butterfly Labs. The FTC was able to persuade the U.S. District Court for the Western District of Missouri to shut down Butterfly Labs on Sept. 23. The FTC action came after it had received consumer complaints about the Butterfly Labs Bitcoin miner. "We often see that when a new and little-understood opportunity like Bitcoin presents itself, scammers will find ways to capitalize on the public's excitement and interest," Jessica Rich, director of the FTC's Bureau of Consumer Protection, said in a statement. "We're pleased the court granted our request to halt this operation, and we look forward to putting the company's ill-gotten gains back in the hands of consumers."
For its part, Butterfly Labs has issued its own statement denying allegations made by the FTC.