The cryptocurrency boom has brought a wave of new endeavors that promise to make people money. But while there are plenty of legitimate investment opportunities out there, scams are also commonplace. That seemingly includes VBit Technologies, a company currently faced with legal action on multiple fronts.
People were excited when VBit Technologies first appeared. It was a novel venture led by a Philadelphia entrepreneur that promoted bitcoin mining as something that would bring massive returns for investors. And when it started, it did just that, pulling in immense profits for those involved.
Because of its early success, thousands joined in and even reinvested earnings, purchasing various mining packages to rake in thousands of dollars a month. Many customers even brought others into the fold, incentivized by VBit’s pyramid-like “affiliates” program.
However, things went downhill after the company was sold.
Don Vo, the founder and CEO of VBit Technologies, sold it to a Chinese company for $105 million. And after the sale, he vanished, leaving customers trapped and desperate as they eventually lost access to $11 million worth of Bitcoin in inaccessible company-controlled accounts.
While the fact that the accounts were completely controlled by the company should have been an early warning sign, the roughly 15,000 investors were blinded by success.
With crypto soaring in 2021, everyone involved made money, and VBit made it easy for anyone to get in on the hype. It allowed customers to buy into a high-powered computer meant to mine Bitcoin and gave them a portion in return. In essence, it provided the exciting returns of the industry without the complications.
But as crypto began to crash, things changed, and payouts began to take longer when investors wanted to make withdrawals. Instead of hours, they began to take days, then weeks. Finally, things froze altogether, with the successor company, Advanced Mining Group, reporting that it would no longer be able to service the US market.
At that time, Advanced Mining Group revealed an SEC investigation, which it pointed out as the reason behind ceasing withdrawals and sales. And despite promising to refund customers for their mining packages, the company went silent, no longer communicating with panicked investors.
The SEC investigation was not the only case of scrutiny against the company, though. In 2020, Don Vo, then CEO of VBit, was ordered to stop operations in Washington and pay back 82 customers to the tune of $156,000.
The argument was that VBit was selling unregistered securities due to the way it operated. Vo cooperated, but that did not stop VBit from expanding and continuing to do the same thing elsewhere.
That is not the end of the legal trouble faced by VBit Technologies, though. State financial regulators are cracking down on the company. Additionally, it faces complaints to the SEC and a federal lawsuit alleging securities fraud. The words “Ponzi scheme” are even being thrown around.
While the massive scandal is a blow to investors, it is not the first of its kind. Crypto oversight is known to be thin, and fraud is a regular occurrence in the still budding industry. It is to the point that the Federal Trade Commission has given estimates of at least $1 billion in losses associated with crypto fraud cases since last year.
Spencer Hulse is a news desk editor at Grit Daily News. He covers startups, affiliate, viral, and marketing news.