Individual Charged With Misappropriating $48.5M in Bitcoin Mining Investment Scheme
The U.S. Securities and Exchange Commission has charged Danh C. Vo, founder and chief executive officer of VBit Technologies Corp., with fraudulently raising over $95.6 million from approximately 6,400 investors and misappropriating $48.5 million of investor funds in connection with his bitcoin mining business called “VBit” from at least December 2018 through at least February 2022.
The SEC’s complaint alleges that 37-year-old Vo, formerly of Philadelphia, solicited investors by lying to them about the nature of VBit’s business, its assets, and how he would use their money. According to the complaint, Vo offered and sold “hosting agreements” that purported to provide investors with a passive income stream through bitcoin mining – the process of using high-speed computers (known as “mining rigs”) to solve complex algorithms to validate and secure transactions on the blockchain and earn bitcoin. The complaint alleges that Vo, through VBit, sold hosting agreements for far more mining rigs than VBit was actually operating.
Through the agreements, VBit offered investors several pricing tiers with names such as Bronze, Silver, Gold, Platinum, Diamond, and Black Diamond. The higher the tier, the more processing power to purportedly mine bitcoin, and the more expensive the investment. According to the SEC, the highest and most expensive tier – the Black Diamond hosting package – purported to include eight mining rigs that provided hashpower of 800,000 gigahash per second.
According to VBit’s website, the cost for customers to buy the eight mining rigs without entering into a hosting agreement was $113,908. However, VBit offered a pricing incentive that lowered the cost of the mining rigs if an investor entered into an agreement. Nearly every investor chose this option. The price of the hosting services themselves also varied depending on the length of the term. If an investor entered into a one-year hosting agreement, the Black Diamond package would cost the investor $101,701. With a two-year hosting agreement, it would cost $95,783. Under the terms of the agreements, investors were required to pay VBit at least 50% of the cost of the mining rigs up front and could pay the remainder over a 36-month period. From December 2018 to 2022, VBit allegedly raised approximately $95,641,184 from investors, collecting over $78 million in 2021 alone.
In its three-plus years of operations, VBit allegedly entered into approximately 10,388 hosting agreements with approximately 6,400 investors. From December 2018 through mid-2022, VBit mined approximately 425.2 bitcoin.
The complaint further alleges that Vo misappropriated $48.5 million from investors and used large sums of the misappropriated funds for gambling and gifts to family members before he fled the United States. According to the SEC, Vo was able to make these transfers undetected because he exercised complete control over VBit’s finances.
The SEC’s complaint, filed in federal court in Delaware, charges Vo with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and seeks permanent injunctions, disgorgement with prejudgment interest, a civil penalty, and an officer and director bar against him. The complaint names as relief defendants Vo’s family members, Phuong D. Vo, My Tien Thi Nguyen, Danny H. Vo and Diem Vo. The relief defendants have consented to final judgments, subject to court approval, ordering them to pay disgorgement of ill-gotten gains.
Click here to visit the AltsWire directory page.
