After getting hundreds of complaints about Butterfly Labs, a Missouri-based maker of Bitcoin mining equipment that started operations in 2010, the Federal Trade Commission investigated. On Tuesday, the FTC announced a temporary restraining order from a federal court to shut the company down and freeze its assets. This is in response to complaints from many small investors and angry customers who have sued for fraud. The allegations claim the company charged them in advance for high-speed encryption machines that arrived months late, damaged, or not at all.

The FTC alleges that Butterfly Labs collected as much as $50 million from customers, charging thousands of dollars in pre-sales for equipment that either never arrived or was useless by the time it did. Meanwhile, according to FTC attorney Helen Wong, the owners were using company credit cards for personal shopping outings at Nordstroms and Bed, Bath & Beyond. Other “company expenses” included massages, saunas and the purchase of firearms. And in 2010, one of the founders, Sonny Vleisides, pled guilty to mail fraud for his “involvement in an international, multi-million dollar lottery scam.”

The FTC claims Butterfly Labs put “Bitforce” mining machines up for sale on its website in June 2012, promising an October 2012 delivery date. While over 20,000 customers ordered them, none had received them over a year later, according to the FTC complaint. In November 2013, Butterfly Labs claimed all the Bitforce machines had shipped but consumers continued to file complaints. In many cases, the customers had paid for the machines with real money. “For all orders, [Butterfly Labs] required consumers to pay up-front by either PayPal, Bitcoins, or by a bank wire transfer the entire purchase amount.” says the complaint.

Moving forward, PayPal is making it harder for Bitcoin enthusiasts to be fleeced. As of September 2013, having received 6,000 complaints in total, PayPal froze Butterfly Labs’ account, containing $11 million. According to reports, PayPal banned Butterfly Labs from its platform in December 2013.

In response, Butterfly Labs claims that its business is “very real,” and that it looks forward to defending itself in court.