"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 US Federal Trade Commission's (FTC) Bureau of Consumer Protection, was quoted by The Guardian as saying.
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According to the FTC, the company conned consumers out of thousands of dollars in exchange for the "BitForce" computers that it promoted but failed to provide. The ones it provided were close to obsolete, the newspaper reported.
It is estimated that the number of those cheated by Butterfly Labs exceeds 20,000.
Bitcoin is a virtual currency founded in June of 2012 as an alternative to traditional payment systems. It can be used to purchase goods and services from stores and online retailers but is not issued by a central bank or backed by a government in cases of losses.
To get bitcoins, users have to calculate complex algorithms, which, as users proceed to more algorithms, become even harder to resolve, requiring computers far more powerful.
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