SEC says third-party Bitcoin mining services are securities offerings in new lawsuit. The SEC charged a Philadelphia-based Bitcoin mining entrepreneur with running an illegal securities scheme and misappropriating over $48 million of customer funds.

The U.S. Securities and Exchange Commission has filed a civil enforcement action against Danh C. Vo, founder and CEO of VBit Technologies Corp., alleging that his third‑party Bitcoin mining “hosting” business was in substance an unregistered securities offering and a large‑scale fraud. According to the SEC’s complaint in the District of Delaware, Vo allegedly raised more than $95.6 million from about 6,400 investors between 2018 and 2022 through “Hosting Agreements” that promised passive income from Bitcoin mining, while misappropriating approximately $48.5 million of investor funds for gambling, gifts to family members, and other personal uses before fleeing the United States. The SEC alleges that VBit marketed contracts under which investors supposedly purchased mining rigs and paid VBit to host and operate them in its facilities, with VBit controlling the equipment, directing the hashrate to pools it selected, and distributing mining proceeds to investors. The complaint claims VBit sold hosting agreements linked to far more mining rigs than it actually operated, misrepresented its business and assets, and used new investor money to pay earlier investors and cover operating costs. In the SEC’s view, these Hosting Agreements are “investment contracts” under the Howey test because investors contributed money in a common enterprise with an expectation of passive profit based entirely on VBit’s efforts, making them securities that were offered and sold without registration. The case is significant because the SEC explicitly frames certain third‑party Bitcoin mining hosting services as securities offerings, sharpening the regulatory line between ordinary proof‑of‑work mining—previously described by SEC staff as generally outside securities laws—and centrally run, profit‑sharing mining schemes where investors have no control over the hardware or operations.

✨ AI-generated background, compiled from web sources — not editorial content.

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• Danh C. Vo - SEC.gov (sec.gov)
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