The Trump SEC has revealed at least one crypto-related service it considers to be a securities offering, at least in some cases: third-party Bitcoin mining.
In a new lawsuit filed Wednesday, the regulator accused Danh C Vo of Philadelphia, founder of Bitcoin mining firm VBit, with offering illegally unregistered securities.
In addition to selling customers Bitcoin mining rigs, VBit also offered a hosting service in which customers would buy a stake in the company’s mining operations and — with VBit operating and controlling the rigs the entire time — receive periodic Bitcoin payments based on the proportion of computing power the customer had purchased.
“Vo led investors to expect profits derived from the efforts of third-parties — Vo and his agents — because investors relied on VBit’s operation and control of the mining rigs to generate profits,” the SEC said, arguing that the third-party mining service should be considered a securities offering.
The SEC has also accused Vo of misleading investors about the nature of his business, by not operating enough mining rigs to correspond with the number of hosting agreements he was selling. Plenty of VBit customers “suffered substantial losses” as a result, the agency claimed.
Further, the SEC alleged that Vo misappropriated $48.5 million of customer funds, which he used to buy crypto, gamble, and send lavish gifts to family members.
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The lawsuit is a rare example of continuity between the crypto-related agendas of the Biden and Trump SECs.
The agency’s investigation into Vo stretched back as far as 2021, according to this week’s complaint. Many such crypto-related investigations commenced under the Biden-era SEC were dismissed as soon as the Trump administration regained control of the agency earlier this year. But instead of dismissing the investigation into Vo and VBit, the Trump SEC has opted to litigate.
Though the Trump administration has moved aggressively this year to create a much more permissive regulatory environment for crypto projects and users, lawmakers — even from the president’s own party — have begun expressing concern about the potential proliferation of scams in the sector.
On Wednesday, senators unveiled a bipartisan bill that would establish a federal task force dedicated to identifying and rooting out crypto-related scams.
