SEC Charges VBit CEO in $48.5M Fraud; Labels Managed Hosting ‘Securities’
The SEC charges VBit founder Danh Vo with $48.5M fraud, setting a precedent that passive, pooled mining contracts constitute securities offerings.
The Securities and Exchange Commission (SEC) has charged Danh C. Vo, founder of VBit Technologies, with defrauding investors of $48.5 million in a scheme that masked a Ponzi-like structure as a Bitcoin mining operation. The complaint, filed Dec. 17 in Delaware federal court, explicitly classifies VBit’s "Hosting Agreements" as securities. A designation with sharp implications for the broader mining-as-a-service sector.
The $95.6 Million Illusion
According to the filing (Case No. 1:25-cv-01513), Vo raised $95.6 million from nearly 6,400 investors between 2018 and 2022. The pitch was simple: a "turnkey solution" for passive income. Investors purchased mining packages, believing VBit would procure and operate rigs on their behalf.
The reality was purely extractive. The SEC alleges Vo sold hosting agreements for thousands of mining rigs that never existed. Instead of deploying hardware, Vo allegedly misappropriated $48.5 million, diverting funds to gambling, luxury gifts, and family members before fleeing the United States in late 2021.
The complaint alleges that Vo, through VBit, sold Hosting Agreements for far more mining rigs than VBit was actually operating.
Regulatory Signal: Control Equals Security
Beyond the fraud, the SEC’s legal argument draws a critical line for the crypto mining industry. The agency deemed VBit’s contracts "securities" because investors relied entirely on VBit’s managerial efforts to generate returns. Unlike standard hosting, where a client owns a specific machine and rents rack space, VBit investors allegedly had no control over their hardware and were pooled into a collective hashrate structure.
This "passive profit" model satisfies the Howey Test’s criteria for an investment contract. The distinction is vital: legitimate hosting providers who act merely as landlords for client-owned hardware remain outside this classification. VBit crossed the line by selling the result of mining (profit) rather than the means (infrastructure).
Market Reaction
The market largely shrugged off the enforcement action as a cleanup of bad actors rather than a systemic threat. Bitcoin (BTC) held steady at approximately $86,000, unbothered by the exposure of a defunct 2021-era scheme. The SEC seeks permanent injunctions and disgorgement from Vo and named relief defendants, including his family members.
