SEC alleges VBit crypto boss diverted $48.5 million from investors

SEC says crypto mining founder raised more than $95 million from investors and diverted about $48.5 million for his own use, according to the agency. 

The Securities and Exchange Commission has accused Danh C. Vo, founder of VBit Technologies Corp., of running an unregistered and fraudulent bitcoin mining investment offering that raised over $95.6 million from approximately 6,400 investors, according to a filing in federal court in Delaware. 

From at least December 19, 2018, through at least February 13, 2022, Vo, through VBit and its purported successor, Advanced Mining Group, offered “Hosting Agreements” that bundled bitcoin mining rigs with hosting services, the SEC said. Vo claimed VBit provided “a turnkey solution for average people to start making a passive income stream through Bitcoin mining without all the headaches of operating the machines,” the filing stated. 

The SEC said VBit offered multiple tiers of hosting packages, including Bronze, Silver, Gold, Platinum, Diamond and Black Diamond. The Black Diamond package purportedly included eight mining rigs with 800,000 gigahash per second of hashpower. According to the filing, VBit’s website listed the cost of those eight rigs at $113,908 if bought without hosting, but $101,701 with a one-year Hosting Agreement and $95,783 with a two-year agreement. Investors were required to pay at least 50% of the rig cost upfront and could pay the balance over 36 months. 

Almost every customer entered into Hosting Agreements, the SEC said, which left VBit in control of the rigs’ operation. Under those agreements, VBit agreed to provide facilities, power and internet access and to install, maintain and operate the equipment. Investors were not provided serial numbers or other identifiers for individual rigs and could not visit the data centers without VBit’s consent and supervision, according to the filing. 

The SEC alleges that VBit sold far more mining capacity than it actually ran. In 2020, VBit sold Hosting Agreements for 3,325 mining rigs but operated only 920, the SEC said. In 2021, it allegedly sold agreements tied to approximately 8,472 rigs but operated only 1,643, generating 177,280 terahash of daily power compared with a purported 846,700 terahash associated with the sold rigs. 

VBit entered into approximately 10,388 Hosting Agreements with approximately 6,400 investors and, from December 2018 through mid‑2022, mined approximately 425.2 bitcoin, according to the filing. The SEC said VBit pooled investor mining rigs and bitcoins, holding the digital assets in custodial wallets controlled exclusively by Vo. 

Investors accessed online accounts through a VBit portal. The SEC alleges those accounts displayed bitcoin earnings that were not based on actual mining results but on a formula using designated hashrate. The filing says investor accounts were effectively empty until they initiated a withdrawal request, at which point bitcoin was transferred from a system wallet that Vo controlled. 

From at least December 18, 2020, through at least November 18, 2021, Vo transferred approximately $48.5 million of the approximately $95.6 million raised from investors into his personal bank accounts, the SEC said. Between December 18, 2020, and mid‑October 2021, he allegedly moved approximately $32.7 million from his personal bank account to his personal account on a crypto asset trading platform, some of which he used to purchase bitcoin and other crypto assets. 

The filing also describes transfers of investor funds to family members, who are named as relief defendants. Before October 2021, Vo gave his sister, Diem T. Vo, $300,000, and on November 2, 2021, he gave his brother, Danny H. Vo, $500,000, the SEC said. On November 17, 2021, he allegedly transferred $100,000 to his mother, My Tien Thi Nguyen. 

Between November 16 and December 21, 2021, the SEC said, Vo transferred additional funds for the benefit of his then‑wife, Phuong D. Vo. On November 16, 2021, Vo allegedly gave a friend $300,000 of misappropriated investor funds, which the friend subsequently transferred to her. Between November 16, 2021, and December 21, 2021, Vo allegedly gave Phuong D. Vo an additional $1.8 million, according to the filing. On November 16, 2021, Vo also initiated the process of transferring $1,000,000 of investor funds into a trust for his minor daughter, the SEC said. 

The SEC said Vo became aware of its investigation on or about October 19, 2021. On or about November 20, 2021, he left the United States, with a travel itinerary listing Vietnam as his final destination. 

On January 31, 2022, VBit announced that it had been sold for $105 million to Advanced Mining, described as an “Asian-based company” with “global” operations in the “crypto mining sector.” The SEC said Advanced Mining’s only activity before the supposed acquisition was registering a website in November 2021, and that there are no publicly available records of any legitimate business activity by Advanced Mining. 

The SEC is seeking injunctions, disgorgement with prejudgment interest, civil penalties and an officer and director bar against Vo. The filing sets out the SEC’s allegations, and no court has yet made findings or entered a final judgment.