Danh C. Vo, 37, launched VBit Technologies Corp. in 2018 as a platform for investors to hold shares in the company’s computing power used to mine bitcoin. The cryptocurrency assets are created by networks of computing platforms that solve complex puzzles, allowing the entire bitcoin network to function securely and reward miners for their blockchain contributions.
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Vo marketed his company as a “turnkey solution” for investors to profit from bitcoin mining without the responsibility and technical knowledge required to operate drilling rigs. In most cases, rather than selling equipment directly to investors, Vbit offered tiered “hosting” agreements that allowed investors to choose how much processing power they wanted the company to operate on their behalf for bitcoin mining.
Between December 2018 and February 2022, Vo raised $95.6 million from about 6,400 Vbit investors, SEC investigators said. The company pooled its computing power with third parties to mine approximately 425.2 bitcoin during that time, an amount now worth $36 million.
Some investors received returns, but others suffered significant losses and were misled by Vo about the operations and finances of Vbit, the SEC complaint say.
Vbit was said to be operating only a small portion of the mining rigs it claimed to operate, based on the number of hosting agreements the company had signed. Despite lacking the computer capacity and equipment to execute contracts, Vo continued to attract new investors, SEC investigators said.
Vo allegedly transferred millions of dollars to personal bank accounts, using most of the money to gamble on other cryptocurrencies or send investors’ assets to family and friends. Vo fled the country to Vietnam in November 2021, about a month after learning of the SEC investigation.
To cover up his activities, Vo allegedly gave investors access to online accounts that reflected fake bitcoin balances. Some investors were able to withdraw money from the accounts, but most used the balance to pay off their hosting agreements. Vbit did not have enough money to fund the amounts in all investors’ accounts, and Vo had exclusive control over the company’s finances, investigators said.
In January 2022, Vo announced that he had formed a successor company, Advanced Mining Group, to buy Vbit for $105 million. He called the new venture an “Asian” crypto company with global scale and described the sale of Vbit as a way to give him “peace of mind and freedom to focus on my health,” according to the complaint. Vbit investors had their accounts frozen and were unable to withdraw funds.
Investigators said Vbit and Advanced Mining Group were never registered with the SEC as required by law.
Vo is accused of multiple violations of SEC regulations. The agency is seeking a jury trial and a court order for Vo to return funds embezzled from investors. Vo’s family and friends are also named as defendants for the money they received. The SEC also requires Vo to pay a civil penalty and be barred from issuing securities.
SEC officials did not immediately respond to a request for comment on whether Vo still lives in Vietnam or elsewhere.
The complaint was filed in the United States District Court for the District of Delaware, where Vbit Technologies Corp. has been founded. The company has since closed down, researchers said.
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