In a new development in the Case against Butterfly Labs, the Court overseeing the case has ordered bitcoins held by Butterfly Labs to be turned over to the Court appointed temporary receiver. The order also gives the receiver authorization to convert the bitcoins "to cash on a systematic and reasoned basis." The justification for this measure is at least to ostensibly create reserves with which refunds for Butterfly Labs customers may be paid from.
It is interesting to note the incredible degree of autonomy given to the receiver under the order to both sell the bitcoins as well as to spend money hiring a potentially unlimited number of "professionals and contractors" to assist in receiving and converting the bitcoins to United States Dollars.
The court order is available as a pdf here, or as plaintext below:
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
FEDERAL TRADE COMMISSION,
BF LABS INC., et al.,
Case No. 4:14-CV-00815-BCW
ORDER GRANTING MOTION FOR APPROVAL OF TRANSFER PROTOCOL AND
METHODOLOGY FOR TRANSFER OF ASSETS TO COURT CONTROL
This matter is before the Court on the Motion for Approval of Transfer Protocol and
Methodology for Transfer of Assets to Court Control, filed by the Temporary Receiver Eric L.
Johnson (“Temporary Receiver”), on October 29, 2014. Doc. #122. The Court finds that the
Motion should be granted.
The Stipulated Interim Order empowered Temporary Receiver to manage all assets of
BFL and to manage and administer the business of BFL. Doc. #54 at §§ X(B), X(H). The order
also authorized the Temporary Receiver to “begin establishing an adequate cash reserve to cover
potential refund liability. In this respect and under the supervision of Temporary Receiver, the
following actions may occur immediately . . . Conversion of Receivership Defendant’s
substantial bitcoin holdings to cash on a systematic and reasoned basis.” Doc. #54 at § XI(E)(4).
The Stipulated Interim Order requires all parties to “cooperate in transferring
Receivership Defendant’s bitcoins to a Court-controlled bitcoin wallet, under the direction and
supervision of Temporary Receiver. Temporary Receiver may hire independent professionals
and/or contractors, as he deems necessary, to ensure safe and secure transfer of bitcoins.” Doc.
#54 at § XI(C)(5).
Case 4:14-cv-00815-BCW Document 123 Filed 11/03/14 Page 1 of 2
IT IS ORDERED that the Temporary Receiver’s proposed Transfer Protocol containing
the methodology for transferring bitcoins held in Receivership Defendant Butterfly Labs Inc.
(BFL)’s Storage Wallet to a Court-controlled bitcoin wallet, Doc. #122 and Ex. A thereto, is
Date: November 3, 2014
/s/Brian C. Wimes
JUDGE BRIAN C. WIMES
UNITED STATES DISTRICT COURT
Case 4:14-cv-00815-BCW Document 123 Filed 11/03/14 Page 2 of 2