The Federal Trade Commission has asked a federal court to shut down digital music service provider BurnLounge, saying the company is operating an illegal pyramid scheme.

BurnLounge allows music fans to set up their own digital music services, which can be customized to a certain artist or number of artists based on their preferences, and keep a share of all sales. There are several levels of membership in the BurnLounge program, the more expensive of which ask members to actively recruit other to open "affiliate" digital services. These members would receive a bounty for each affiliate they sign up.

This practice, the FTC alleges, "would result in a substantial percentage of participants losing money," according to a statement.

The FTC filed the complaint in the U.S. District Court for the Central District of California, requesting the court order BurnLounge to halt all operations, freeze the company's assets pending trial.

A hearing on the FTC's request will take place June 19.

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