The U.S. Securities and Trade Fee has charged Danh C. Vo, founder and CEO of bitcoin mining firm VBit Applied sciences Corp., with defrauding buyers out of $48.5 million.
In response to the SEC, Vo misused the funds for playing, cryptocurrency purchases, and items to relations, whereas deceptive buyers concerning the operations of his enterprise.
The criticism, filed within the U.S. District Court docket for the District of Delaware, alleges Vo raised over $95.6 million from roughly 6,400 buyers between December 2018 and February 2022.
He offered “internet hosting agreements,” which promised buyers a share of earnings from bitcoin mining rigs operated by VBit. Most clients selected this passive funding possibility fairly than buying rigs themselves.
Vo misrepresented what number of mining rigs had been truly operational, successfully promoting extra internet hosting agreements than the corporate may help.
“Whereas some buyers obtained returns, others suffered substantial losses,” the criticism said. Vo both knew or was reckless in not understanding that the corporate couldn’t meet the obligations tied to the internet hosting agreements.
Vo, 37, exercised full authority over VBit, together with its promotional supplies, web site content material, and investor account data.
The SEC stated the internet hosting agreements qualify as securities as a result of buyers relied on Vo and VBit’s efforts to generate earnings.
SEC: Members of the family obtained misappropriated funds
Along with the misappropriation, Vo allegedly transferred $5 million to relations, together with his ex-wife, mom, brother, and sister, the fee stated. He reportedly left the U.S. with the remaining misappropriated funds following his divorce in November 2021.
A number of relations are named as reduction defendants within the lawsuit and have consented to disgorge the funds they obtained, pending courtroom approval, per the SEC.
VBit was acquired by Superior Mining Group in 2022 and is now defunct. The motion seeks disgorgement of ill-gotten features, civil penalties, and a ban on Vo from taking part in future securities choices.
The lawsuit additionally comes as Congress debates federal measures to deal with cryptocurrency scams. A bipartisan proposal would create a devoted activity pressure to determine and tackle fraud within the digital asset sector.
The SEC stated they need Vo’s alleged conduct to be a reminder that buyers ought to rigorously consider claims of passive revenue from crypto and ensure that operations are clear and verifiable.