The U.S. Securities and Exchange Commission (SEC) has initiated charges against Danh C. Vo, the founder and CEO of VBit Technologies Corp., a bitcoin mining company, for alleged fraud involving $48.5 million intended for investors.
The SEC claims that Vo misappropriated investor funds for personal gambling activities, cryptocurrency purchases, and gifts to family members, while simultaneously providing misleading information regarding the operational status of his business.
The complaint, which was lodged in the U.S. District Court for the District of Delaware, asserts that Vo raised over $95.6 million from about 6,400 investors between December 2018 and February 2022.
Vo offered “hosting agreements” that promised investors a return on investment derived from the profits of bitcoin mining rigs operated by VBit. Many investors opted for this passive investment model rather than purchasing mining rigs independently.
It is alleged that Vo misrepresented the number of operational mining rigs, effectively selling more hosting agreements than VBit could legitimately support.
The complaint states, “While some investors received returns, others suffered substantial losses.” Vo either was aware or displayed recklessness in not recognizing that the company could not fulfill the obligations associated with the hosting agreements.
At 37 years of age, Vo exerted complete control over VBit, including all promotional materials, website content, and investor account information.
The SEC categorized the hosting agreements as securities, emphasizing that investors relied on Vo and VBit’s efforts for profit generation.
SEC: Family Members Benefited from Misappropriated Funds
In addition to the alleged misappropriation, it is claimed that Vo transferred $5 million to family members, including his ex-wife, mother, brother, and sister. Following his divorce in November 2021, he reportedly left the United States with a portion of the misappropriated funds.
Several family members have been named as relief defendants in the lawsuit and have agreed to return the funds received, pending court approval, according to the SEC.
VBit Technologies was acquired by Advanced Mining Group in 2022 and is no longer operational. The SEC seeks the disgorgement of ill-gained funds, civil penalties, and a prohibition on Vo from future participation in securities offerings.
This lawsuit coincides with ongoing Congressional discussions regarding federal measures to combat cryptocurrency scams. A bipartisan proposal has emerged to establish a dedicated task force aimed at identifying and addressing fraud in the digital asset sector.
The SEC has indicated that Vo’s alleged actions serve as a cautionary reminder for investors to scrutinize claims of passive income from cryptocurrencies and to ensure that business operations are both transparent and verifiable.
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