FTC Shuts Down Potential Cryptocurrency Scam

The Federal Trade Commission announced a victory in its first Bitcoin case, in which the agency took to task Butterfly Labs, a Missouri-based computer firm that misled consumers to believe they were able to produce bit coins at high rates worth thousands of dollars. The FTC claims the scam affected 1,000 people, costing from $20 MN to $50 MN.

The computers emphasized in this case were designed to produce bitcoins through the mining process, awarding the solver 25 bitcoins per puzzle solved. As competition for the currency has increased, miners have had to upgrade from traditional home computers to more advanced models. Jessica Rich, director of the FTC’s consumer protection bureau states,

When a new and little-understood opportunity like Bitcoin presents itself, scammers will find ways to capitalize on the public’s excitement and interest.”

According to Helen Wong, FTC attorney, the case likely signals a blooming interest in Bitcoin at the agency.

We’re always interested in any issues that impact consumers and we think that the basic consumer principles of making representations to consumers — and meeting them — always apply, no matter what industry you’re in.”

The FTC’s success in this case reflects awareness among federal agencies of the growing presence of virtual currencies. Furthermore, this specific case exemplifies the steps regulators are prepared to take in order to ensure consumer protection is a top priority for those that want to partake.

 

Read more here- “This is the FTC’s First-Ever Bitcoin Case. And it’s Winning,” (Briang Fung, The Switch)

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Olivia is a graduate of Villanova University where she studied Economics and History, minoring in Gender and Women's Studies. She also has experience working with federal legislatures on health care policy, women's issues, and Internet safety.

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