The founder and CEO of a bitcoin mining operation is facing allegations that he fraudulently raised almost US$100 million from investors and misappropriated more than half of investors’ money.
The U.S. Securities and Exchange Commission (SEC) filed a complaint in federal court in Delaware against Danh Vo, alleging that he breached securities laws in connection with an investment scheme that allegedly solicited investors with promises they could generate passive income through bitcoin mining that would be carried out by his company, VBit Technologies Corp.
The SEC alleged that, between December 2018 and February 2022, the scheme raised over US$95.6 million from approximately 6,400 investors by selling “hosting agreements” — that the SEC alleged were securities. These “hosting agreements” misled investors by vastly overstating the number of crypto mining rigs that the company was actually running, the regulatory agency alleged in its complaint.
“While some investors received returns on their investments, others suffered substantial losses,” the complaint said — adding that Vo also allegedly misappropriated US$48.5 million of investors’ money, which was used for gambling and gifts to Vo’s family.
The SEC’s complaint, which also names several of those family members as relief defendants, is seeking disgorgement, civil penalties and a ban on Vo.
The relief defendants have consented to final judgments that, subject to court approval, order them to disgorge their ill-gotten gains.
According to the SEC, Vo transferred over US$5 million of the misappropriated investor funds to family members — including his ex-wife, his mother, brother and sister — before fleeing the country with the rest.