FTC Settles with Bitcoin Mining Operation Over Alleged Deceptive Practices

FTC Enforcement

On February 18, the FTC announced that a Kansas-based bitcoin mining operation and two of its operators had agreed to settle allegations that their marketing practices for bitcoin mining machines and services were deceptive, and that they failed to deliver their product or mining services in a timely fashion, or at all, to consumers who were charged upfront fees ranging from $149 to $29,899. Under the terms of the FTC’s two orders – one of which was issued to the company and its part-owner and the other to the company’s general manager – the company and individuals are prohibited from (i) misrepresenting to consumers aspects of their bitcoin mining products or services, including speed, efficiency, operational cost, performance, or efficacy; (ii) collecting upfront payments from consumers, unless the product can be shipped or the service started within 30 days of payment; and (iii) keeping consumers’ payments if the product delivered was damaged, or the service provided did not meet the promised specifications. The orders impose judgments of $38,615,161 against the company and its part-owner and $135,878 against the company’s general manager. The FTC partially suspended the judgments due to inability to pay, but commented that the judgments “will become due should the defendants be found to have misrepresented their financial condition.”