SEC Charges Bitcoin Miner For Scamming $48.5 Million
The U.S. Securities and Exchange Commission has recently filed charges against Danh C. Vo, the founder and CEO of VBit Technologies Corp., for allegedly defrauding investors of $48.5 million. The SEC claims that Vo misused the funds for gambling, cryptocurrency purchases, and gifts to family members while deceiving investors about the company’s operations.
The complaint, which was lodged in the U.S. District Court for the District of Delaware, asserts that Vo raised more than $95.6 million from around 6,400 investors between December 2018 and February 2022. He offered “hosting agreements” to investors, promising them a portion of the profits from bitcoin mining rigs operated by VBit. Many investors opted for this passive investment option rather than buying rigs themselves.
It is alleged that Vo misrepresented the number of operational mining rigs, leading to the sale of more hosting agreements than the company could support. While some investors did receive returns, others incurred significant losses as VBit failed to meet its obligations tied to the hosting agreements.
Vo, 37, had complete control over VBit, including its promotional materials, website content, and investor account information. The SEC considers the hosting agreements as securities since investors relied on Vo and VBit’s efforts to generate profits.
SEC: Family members received misappropriated funds
Aside from misappropriating funds, Vo purportedly transferred $5 million to family members, including his ex-wife, mother, brother, and sister, following his divorce in November 2021. He reportedly left the U.S. with the remaining misappropriated funds.
Several family members have been named as relief defendants in the lawsuit and have agreed to return the funds they received, subject to court approval. VBit was acquired by Advanced Mining Group in 2022 and is now defunct. The lawsuit seeks disgorgement of ill-gotten gains, civil penalties, and a ban on Vo from participating in future securities offerings.
This legal action comes at a time when Congress is deliberating federal measures to combat cryptocurrency scams. A bipartisan proposal aims to establish a dedicated task force to identify and address fraud in the digital asset sector.
The SEC emphasized the importance of investors scrutinizing claims of passive income from cryptocurrency and ensuring that operations are transparent and verifiable. The case involving Vo serves as a stark reminder of the risks associated with such investments.
