Investors Sue VBit Companies for Alleged Bitcoin Mining Fraud Scheme
On Monday, July 29, 2024, a group of investors filed an amended class action complaint in the United States District Court for the District of Delaware against several companies and individuals involved in Bitcoin mining operations.
The lead plaintiff is Alisha McKellar, joined by four other individual investors. They are suing on behalf of themselves and all others similarly involved who purchased mining contracts from VBit Technologies Corp. and related entities between January 2019 and the present day.
VBit and its subsidiaries, including VBit Mining LLC and VBit DC Corp, marketed deals to individual investors where they could purchase specialized computer equipment for mining cryptocurrencies like bitcoin. In bitcoin mining, high-powered computers process complex algorithms to verify transactions on the digital currency’s blockchain in exchange for rewards in bitcoin.
The companies, led by CEO Danh Cong Vo, claimed to operate large mining facilities with access to cheap power and experts to maintain the computers. They told investors this was a way to mine Bitcoin without having to handle the technical challenges themselves.
Through contracts called “Mining Contracts,” investors could buy computer hardware and hosting services from VBit to mine bitcoin and other digital currencies. They were promised regular payouts of cryptocurrency into individual online wallets based on the mining capabilities of the computers they leased or purchased.
However, the lawsuit alleges these mining operations were an elaborate pyramid or Ponzi scheme to defraud investors. It claims VBit did not actually operate specialized mining farms and the individual hardware and wallets investors paid for did not truly exist.
Instead of mining bitcoin, the lawsuit states that VBit simply took new investors’ money and used it to pay earlier investors in the façade of successful mining returns. When bitcoin prices dropped in early 2022, the companies could no longer sustain the scheme, and customer withdrawals were frozen.
In January 2022, VBit claimed it was acquired by a new entity called Advanced Mining, allegedly based in Asia. But the complaint asserts Advanced Mining was fictional and continued under the control of the original VBit executives.
The plaintiffs are seeking damages for the unregistered and fraudulent sale of securities in violation of US securities laws. If certified as a class, the suit represents potentially thousands of alleged victims around the world who were misled into the purported bitcoin mining investment opportunity.
Please contact BlockTribune for access to a copy of this filing.
