Feds Force Shut Down of Bitcoin Mining Company

Consumers in the US never received costly machines advertised as helping them obtain Bitcoins, the virtual currency


A federal court has temporarily shut down a company that failed to deliver products that it said would help enable the successful mining of bitcoins, which is a form of virtual currency that can be used as payment for goods and services obtained online.

The Federal Trade Commission (FTC), in its first bitcoin case, alleges that Kansas City-based BF Labs, also called Butterfly Labs, bilked consumers out of at least $20 million and potentially up to $50 million by charging them thousands of dollars for computers it either never delivered or shipped so late after the orders that the machines had become obsolete.

Bitcoins can only be generated by mining, a process in which consumers are awarded bitcoins by racing to solve puzzles with their computers. But as bitcoins have become more popular and more miners have joined the network, it has become increasingly difficult for miners to make a profit, the FTC said.

RELATED: Class-action Lawsuit against CoinTerra’s Bitcoin Mining Machine

Butterfly Labs offered a solution, by selling machines and services – costing between $149 and up to about $30,000 — that the company said would help consumers solve the puzzles quickly to obtain the bitcoins. However, more than 20,000 consumers who paid upfront for a mining machine that the company said would be delivered October 2012 never received them almost a year later. And those that were delivered were defective, obsolete or mining fewer bitcoins than the machines could have if delivered sooner, the FTC alleged.

“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,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection.



Google Money: Stanford Promises Not to Use the Funding for Privacy Research

Stanford's Center for Internet and Society has long received funding from Google, but a filing shows the university recently pledged to only use the money for non-privacy research. Academics say such promises are problematic


This story was co-published with Mashable.

Stanford University recently declared that it will not use money from Google to fund privacy research at its Center for Internet and Society, according to a legal filing made by the school.

"Since 2013, Google funding is specifically designated not [to] be used for CIS's privacy work," the university said in the court filing, found by ProPublica in documents filed in an unrelated lawsuit.

Stanford's Center for Internet and Society has long been generously funded by Google, but the center's privacy research has proved damaging to the search giant in the past two years. Two years ago a researcher at the center helped uncover Google privacy violations that led to the company paying a record $22.5 million fine.

Stanford and Google both said that the change in funding was unrelated to the previous research. But some academics said that Stanford's promise not to use Google money for privacy research is problematic.

"It's such an etiquette breach, it tells you something is really sensitive here," said James Grimmelmann, a University of Maryland law professor who specializes in Internet law and online privacy. "It's fairly unusual and kind of glaring to have that kind of a condition."

Like most universities, Stanford has a policy that does not allow employees to "take money for academic research (or anything else) with strings attached. All donors to the Center agree to give their funds as unrestricted gifts."

Barring work on specific subjects is generally frowned upon, particularly because research that starts in one area can naturally lead to other topics.

"To do research honorably, you have to follow where the data lead," said Cary Nelson, former president of the American Association of University Professors. "You have to have the freedom to follow those leads." Asked if he would work under such conditions, Nelson was curt: "No."

Stanford and Google say the promise to avoid funding privacy issues is simply a result of Stanford's decision to seek Google funding for other projects.

Jennifer Granick, a director at the center, said the "designation" of Google money for non-privacy research that was referred to in the legal document did not amount to a "specific prohibition." The center, she said, chose not to request money from Google for its privacy work this year.

"The money they gave us ran out in 2013, and then we asked for, got, and used Google money for different projects, not because of a specific prohibition," Granick said. "We have other funding for our consumer privacy work."

"When we ask for funding, we often tell the proposed funder what topic areas we plan to use any money we receive to work on. But the gift does not create a contractual obligation for us to spend the money on that subject," Granick said.

Granick said the designation of Google money for non-privacy research is an internal budgeting matter and that Stanford researchers are free to work on whatever they like.


She did not explain what her researchers were supposed to do if they were Google-funded but found their lines of inquiry leading them into privacy-related matters.

Google spokesman Rob Shilkin said that Stanford's decision to seek other funding for its privacy research was not prompted by the company. "We've long made grants to Stanford and other universities supporting independent research on various technical issues and legal topics – privacy, copyright, intermediary liability, patents, and more," he said. "Last year, Stanford Law School again asked for money to fund particular projects they wanted to pursue and we were happy to provide support this work." Google also funds privacy research at other universities including Princeton and Harvard.

Google and Stanford have a long and close history. Google founders Larry Page and Sergey Brin developed their search algorithm while they were graduate students at Stanford. After Google went public, Stanford made hundreds of millions of dollars selling Google stock that it received as payment for allowing Google to use technology developed at Stanford. A university spokeswoman declined to say if Stanford still holds any stock, citing a school policy against revealing specific investments.

Stanford's Center for Internet and Society, founded in 2000, was best known in its early days for work that benefitted Google's cause, including research on net-neutrality issues, which Google has pushed for, and research on fair use, which allows some use of copyrighted material without permission from the author.

But Google has increasingly come under scrutiny from privacy advocates and researchers, since much of the company's business is based on expanding the boundaries of Internet privacy.

Stanford researchers Jonathan Mayer and Aleecia McDonald have been at the forefront of privacy research that impacts Google. In 2012, Mayer was involved in research that showed Google was circumventing users' privacy choices in Apple's Safari Web browser – which led to Google paying the record fine.

In 2011 and 2012, the center's privacy director, McDonald, helped lead a project to create a "Do Not Track" standard. The effort, not supported by Google, would have made it harder for advertisers to track what people do online and likely would have cut into Google's advertising revenue. Tensions over the "Do Not Track" debate ran so high that in 2013, the president of the online advertising's trade association – of which Google is a board member – called center researcher Jonathan Mayer a "Bolshevik of the Internet world" and accused McDonald of being "incompetent."

Mayer and McDonald both said that their research had not been restricted by the change in funding. McDonald said she did not hear any complaints from Google about her work. Mayer said, "Tech firms often grumble following unfavorable research. Google is no exception."

Universities often accept money from outside organizations to research broad subject areas. That's generally not controversial because it allows researchers to go where their findings take them.

But if researchers are restricted, they might be forced to skew their results, ignore credible lines of inquiry or abandon legitimate projects altogether.

For instance, some of the non-privacy research at Stanford's Center for Internet and Society could be more related to privacy than they appear, Grimmelmann said.

Take copyright. A study on the increasing popularity of e-books could lead to the topic of e-book piracy, which could lead to the idea of publishers requiring readers to log in, a practice that could make users' reading habits much easier to track – a clear-cut privacy issue.

"Some of the best copyright scholarship of recent decades ... couldn't have been carried out at the Stanford CIS under the terms of the grant you described to me," Grimmelmann said. "So a commandment that 'Thou Shalt Not Study X' also interferes with the study of the rest of the alphabet."

Update Sept. 23: Stanford’s Jennifer Granick wrote a blog post responding to our article.

Read more of ProPublica's privacy coverage, including why online tracking is getting creepier and how you can safely browse the Web.

Disclosure: Stanford's Center for Internet and Society sponsored a talk by the reporter Julia Angwin about her book "Dragnet Nation" when it was released in the spring.



Mangalyan: India's Mars Orbiter Mission successful

Let schools and colleges celebrate the success by clapping for five minutes. The achievements of our scientists is bigger than when our cricket team wins a tournament, said Modi after ISRO successfully placed the Mangalyan in the Red Planet's orbit


India on Wednesday successfully placed its Mars Orbiter Mission (MOM), Mangalyan in the Red Planet’s orbit. This success has taken the country and its space agency Indian Space Research Organisation (ISRO) to join the elite countries and nations.


The successful manoeuvres were carried out in early hours of 24th September, watched keenly by Prime Minister Narendra Modi, his cabinet colleagues and Karnataka Chief Minister Siddaramaiah.


ISRO said that India’s spacecraft has been placed successfully in orbit around Mars.


Prime Minister Modi described the Mars mission success as a “historic occasion”. "Since the short form of Mars Orbiter Mission was MOM, I was sure about its success because MOM will never disappoint,'' he said.


"Let schools and colleges celebrate the success by clapping for five minutes. Entire country should make this an occasion for celebration. Let’s be proud of the achievements of our scientists. Their achievement is bigger than when our cricket team wins a tournament,'' he said.


Mars Orbiter Mission: Chronology of events


Following is the chronology of events that traces the journey of Mangalyaan which lasted over 300 days:


5 November 2013: ISRO’s PSLV C25 launches India’s Mars Orbiter Mission from Sriharikota, Andhra Pradesh.


7 November 2013: First Earth-bound manoeuvre performed.


8 November 2013: Second Earth-bound manoeuvre performed.


9 November 2013: Third Earth-bound manoeuvre performed.


11 November 2013: Fourth Earth-bound manoeuvre performed.


12 November 2013: Fifth Earth-bound manoeuvre performed.


16 November 2013: Sixth Earth-bound manoeuvre performed.


1 December 2013: MOM leaves Earth’s orbit, Trans-Mars Injection performed.


4 December 2013: MOM leaves Earth’s Sphere of Influence of 9.25 lakh km radius.


11 December 2013: First course correction manoeuvre performed on the spacecraft.


11 June 2014: Second course correction manoeuvre executed.


22 September 2014: MOM enters Mars’ Gravitational Sphere of Influence; 440 Newton Liquid Apogee Motor test-fired after over 300 days of dormancy; last trajectory correction manoeuvre performed.


24 September 2014: MOM reaches the intended orbit around Mars, making India the first country in the world to have successfully launched its mission to the Red Planet on the very first attempt.


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