Monthly Archives: September 2014

Bitcoin-mining company Butterfly Labs shut down by FTC

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Company marketed specialized computers designed to produce the cryptocurrency but delivered useless machines, according to an FTC complaint.

A bitcoin-related company that allegedly engaged in deceptive marketing of specialized computers designed to produce the cryptocurrency has been shut down at the request of the US Federal Trade Commission.

In a complaint filed earlier this month, the FTC alleged that the Butterfly Labs charged consumers thousands of dollars for computers that mine Bitcoins but then failed to deliver the machines "until they were practically useless, or in many cases, did not provide the computers at all," the agency said in a statement Tuesday.

"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 FTC's Bureau of Consumer Protection, said in a statement. "We're pleased the court granted our request to halt this operation, and we look forward to putting the company's ill-gotten gains back in the hands of consumers."

Bitcoin, which is unregulated and allows for anonymous, untraceable transactions, can be obtained by purchasing it on an exchange or accepting it as payment for goods or services. The peer-to-peer currency can also be generated, or "mined," by solving complex mathematical equations, a process that requires greater computational effort as the pool of possible solutions shrinks. The amount of bitcoins possible is capped at 21 million; there are currently 13.3 million bitcoins in existence.

To perform the arduous mining process, the company marketed what it called a cutting-edge computer for as much as $29,899, the FTC alleged. As of September 2013, more than 20,000 orders for the computer, called BitForce, had not been fulfilled, according to the FTC. The complaint also alleges that Butterfly Labs began marketing a follow-up computer called the Monarch in August 2013 for as much as $4,680 but that by last month few, if any, had been delivered.

"Even where Butterfly Labs did deliver a Bitcoin mining computer to a consumer, the complaint notes that because of the unique nature of the Bitcoin system, the outdated computers were useless for their intended purpose," the FTC said, indicating that a company representative said the passage of time had rendered some machines as effective as a "room heater."

Responding to the FTC's lawsuit, Kansas-based Butterfly Labs said Tuesday it was "disappointed in the heavy-handed actions" of the commission.

"In a rush to judgment, the FTC has acted as judge, jury and executioner, contrary to our intended system of governmental checks and balances," the company said in a statement. "Butterfly Labs is being portrayed by the FTC as a bogus and fake company. To the contrary, Butterfly Labs is very real."

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Bitcoin-mining company Butterfly Labs shut down by FTC

PayPal Testing Bitcoin Payments By Partnering With Cryptocurrency Processors

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PayPal announced Tuesday that it will partner with bitcoin payment processors BitPay, Coinbase and GoCoin to allow customers to buy and sell digital products such as online games using the cryptocurrency. The announcement is not an indication that PayPal will transact in the currency, only that the three partners will handle bitcoin processing for PayPal merchants trading in specific businesses.

PayPal, which is owned by eBay, said that it will allow the third parties into its PayPal Payments Hub in part because each of them already offers its customers some level of protection when trading with the still-questionable digital currency. Tuesdays announcement comes after eBay CEO John Donahoe expressed his admiration for bitcoin on multiple occasions, saying in May that PayPal was actively considering integrating bitcoin.

The company maintained that it only sees digital products (i.e., video games and music) being sold utilizing the decentralized cryptocurrency for the foreseeable future. American and Canadian users will be able to use bitcoin first, though PayPal said it is considering expanding to other markets soon.

Merchants were asking for bitcoin integrations, Scott Ellison, senior director of corporate strategy at PayPal, told Forbes. Digital goods were an easy way to do it first.... People are comfortable paying online for those things.

PayPals announcement has already been portrayed as more of a test program than a full-fledged embrace of bitcoin. Overtstock.com started accepting bitcoin in January and began permitting international customers to use bitcoin in August. Still, questions have persisted about bitcoins volatility and governments inability to regulate it.

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PayPal Testing Bitcoin Payments By Partnering With Cryptocurrency Processors

Assange dubs Google ‘privatized NSA,’ pillories Eric Schmidt

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Wikileaks founder Julian Assange doesn't let the walls of the Ecuadorian embassy in London stop him from criticizing on the Google exec for allegedly collaborating with the US.

During a New York City launch event for his new book, Wikileaks' Julian Assange spoke via video link to a small crowd. CNET/CBS Interactive

NEW YORK -- The first (and so far only) meeting between Google's executive chairman, Eric Schmidt, and Wikileaks founder Julian Assange turned out to be a bust when it occurred in 2011.

And given what Assange had to say about Schmidt on Wednesday at a Manhattan launch party to promote his new book, "When Google Met WikiLeaks," it's unlikely he'll be able to line up a second tte--tte.

Attending the event live by videoconference from the Ecuadorian embassy in London, where he's been granted sanctuary, Assange called Google a "privatized NSA." The reference is to the US National Security Agency, whose surveillance practices caused an uproar last year when classified information about them was disclosed by former NSA contractor Edward Snowden.

Assange went on to claim that the search giant has links to other departments within the US government and US military.

"People who use Google are the product," Assange said, likening the search giant's collection of data for marketing purposes to what some have called the NSA's strategy of collecting as much information as it possibly can. Referring to Android, Google's mobile operating system, Assange said it's "constantly sending your location...streaming back your contacts, emails and everything you search for. It's all collected."

Despite his dislike of Google's business practices, Assange said he and Schmidt are actually "quite similar" to each other.

Schmidt, he said, was quick to grasp difficult concepts, such as how the anonymizing network Tor functions.

Schmidt's job, he said is "difficult" because he has to be "secretary of state" for Google. Assange said it was "sad" that Schmidt had to resort to insults in his interview with ABC News yesterday.

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Assange dubs Google 'privatized NSA,' pillories Eric Schmidt

Google’s Schmidt says Assange detainment is ‘luxury lodgings’

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On the eve of the release of the WikiLeaks founder's new book, titled "When Google Met WikiLeaks," the Google executive chairman goes on the offensive.

Google Chairman Eric Schmidt sits down for an interview at the 2013 All Things D mobile conference in New York. Marguerite Reardon/CNET

Eric Schmidt appears to be doing some damage control. The Google executive chairman appeared on ABC News on Tuesday and called WikiLeaks founder Julian Assange "very paranoid."

Assange, the notorious document leaker, is coming out with a book this week titled "When Google Met WikiLeaks." The book recalls an encounter when Assange met Schmidt in 2011. In the book, Assange aims to show that Google is tied to the US government when it comes to the openness of the Internet. In other news interviews, Assange has also said Google is basically a privatized National Security Agency.

Schmidt adamantly denied Assange's allegations in the ABC interview Tuesday.

"Julian is very paranoid about things. Google never collaborated with the NSA and in fact, we've fought very hard against what they did," Schmidt said. "We have taken all of our data, all of our exchanges, and we fully encrypted them so no one can get them, especially the government."

Assange has been huddled in the Ecuadoran Embassy in London for more than two years, as he waits for diplomatic asylum. He's avoiding extradition to Sweden over alleged sexual offenses, which he has denied. Assange also has said he fears extradition to the US, where he believes he could be tried for espionage crimes for his involvement in the release of classified documents.

The Ecuadorian embassy is made up of a series of converted apartments. Ecuador occupies only the ground floor of the building, and British police remain in the hallways and elevators where Ecuador's reach does not extend. If Assange leaves his apartment, he can be immediately arrested.

In the ABC interview, Schmidt also blasted Assange's living arrangement.

"He's of course writing from the, shall we say, luxury lodgings of the local embassy in London," Schmidt said.

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Google's Schmidt says Assange detainment is 'luxury lodgings'

Chelsea Manning files suit over military’s decision not to provide hormone treatment

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Chelsea Manning, the Army private serving 35 years for leaking military and diplomatic secrets to the anti-secrecy site WikiLeaks, filed a lawsuit Tuesday alleging that the military has failed to fulfill its constitutional obligation to provide treatment for her gender dysphoria.

The term describes a condition in which a persons innate sense of their gender differs from the one he or she was assigned at birth. Manning, who enlisted in the Army as a man, announced last year that she was a transgender woman and would seek treatment for her condition while serving her prison term.

In the suit,Mannings attorneys argue that, despite her repeated requests, the military has failed to provide hormone therapy or permit her to live outwardly as a woman, which amounts to a violation of the Constitutions prohibition against cruel and unusual punishment.

Every day that goes by without appropriate treatment, Plaintiff experiences escalating anxiety, distress, and depression. She feels as though her body is being poisoned by testosterone, wrote the attorneys, including lawyers from the American Civil Liberties Union. Plaintiff fears that without appropriate treatment, her anguish will only escalate and she will not be able to survive the 35 years of her sentence, let alone the next few years.

Multiple military doctors have diagnosed Manning with gender dysphoria over the years, but the Army has struggled with how to deal with her and respond to her repeated requests for treatment and accommodations while serving her sentence at the military prison in Fort Leavenworth, Kansas.

While federal prisons have systems in place to deal with transgender inmates, military prisons do not, because transgender people are technically barred from serving. The Army has changed its records to reflect Mannings name change, from Bradley to Chelsea, but it still considers Manning a male and has housed her with male inmates.

The Army has said in the pastthat Manning was approved to receive some treatment, and according to the suit, Manning was recently given access to womens undergarments. But Manning has asked to be allowed grow out her hair and use womens cosmetics and grooming products. She has also asked for hormone therapy, including estrogens and anti-androgens. In the suit, she has not asked for surgery.

According to the suit, Manning has contemplated suicide and self-mutilation. An outside expert retained by Manning concluded that she is experiencing significant distress and is at high risk for serious medical consequences, including self-castration and suicide, if such medically necessary treatment is not promptly provided.

The Armydeclined to comment, citing a longstanding policy against commenting on pending litigation.

Sandhya Somashekhar is a health reporter for the Washington Post.

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Chelsea Manning files suit over military’s decision not to provide hormone treatment

Chelsea Manning Sues Federal Government for Hormone Therapy

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'I do not believe I'll be able to survive another year or two ... without treatment,' says the trans military whistleblower, in the wake of the military's continued delays in providing transition-related medical care.

Wikileaks source Chelsea Manning filed a lawsuit in federal court against Secretary of Defense Chuck Hagel and the Pentagon Tuesday, demanding access to hormone therapy more than a year after her first request for such treatment.

The military's ongoing delay in providing such gender-affirming treatment has prompted the rapid deterioration of Manning's mental health, reports theHuffington Post.

Her lawsuit, filed Tuesday,seeks a preliminary injunction that would allow her to begin hormone treatment while the case is litigated, which could possibly last several years. Manning's legal team had previously indicated that they would file a lawsuit on her behalf if the Army continued to drag its feet on providing basic health care to Manning while she is in custody.

"It has now been more than four years since I was first diagnosed with gender dysphoria, a condition that I have struggled with my entire life," Manning stated in the filing. "I do not believe I will be able to survive another year or two let alone twenty to thirty years without treatment."

Manning is currently serving a 35-year sentencein an all-male facility at the U.S. Disciplinary Barracks at Fort Leavenworth, Kansas,for leaking government documents relating to the wars in Iraq and Afghanistan to the website WikiLeaks in 2010.

The former Army intelligence officer publiclycame out as transgender last August after she was sentenced. She has since been diagnosed by a number of military doctors with gender dysphoria, an incongruence between one's assigned gender and the one with which they identify. Hormone replacement therapy is one of a number of recommended courses of treatment for gender dysphoria, as outlined by the World Professional Association for Transgender Health's Standards of Care, and as supported by the American Medical Association.

In August, it was revealed that despite reports that Sec. Hagel had approved Manning's request to begin hormone therapy, she hadn't received any such treatment. One of Manning's attorneys, American Civil Liberties Union lawyer Chase Strangio, has been in frequent contact with Manning, and says she has been in "escalating distress" the longer the military has refused her hormone therapy, according to Huff Post.

"She, for a long time, retained the hope that they would do the right thing," Strangio said. "Since then she's been very desperate for relief for a very serious condition which is not being taken seriously."

David Coombs, who represented Manning in her court-martial trial, is reportedly involved in the new federal lawsuit, as well. Coombs had previously indicated the possibility of filing an Eighth Amendment lawsuitif the military continued to deny his client the treatment, which he argues is "cruel and unusual punishment."

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Chelsea Manning Sues Federal Government for Hormone Therapy