FTC blocks Leawood bitcoin miner company

A Leawood, Kan., company that builds equipment to mine bitcoins has been shut down by federal regulators.

The Federal Trade Commission alleged Butterfly Labs Inc. charged consumers thousands of dollars for its high-powered computers but then failed to deliver on time, or often at all, according to the Kansas City Business Journal. FTC officials said by the time Butterfly Labs’ computers were delivered to customers they were "practically useless."

"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."

Created overseas in 2009, bitcoin is a digital currency exchanged independent of banks or governments. The currency can be converted into cash when deposited into accounts at prices set in online trading.

Bitcoins are earned through a process known as “mining” in which prospective users solve complex math problems online to obtain the coins.
 
Read more from the Kansas City Business Journal.