SEC Charges Bitcoin Miner for Duping Investors Out of $48.5 Million
SEC Charges Bitcoin Miner for Duping Investors Out of $48.5 Million
A solo bitcoin miner was charged by the SEC for misappropriating $48.5 million from investors by selling bogus mining hosting agreements that promised passive income.
The U.S. Securities and Exchange Commission has charged the founder and CEO of a bitcoin mining company with defrauding investors out of $48.5 million. According to the SEC, he misused the funds for gambling, cryptocurrency purchases, and gifts to family members while misleading investors about the operations of his business.
The complaint, filed in the U.S. District Court for the District of Delaware, alleges that he raised over $95.6 million from approximately 6,400 investors between December 2018 and February 2022. He sold "hosting agreements," which promised investors a share of profits from bitcoin mining rigs operated by his company. Most customers chose this passive investment option rather than purchasing rigs themselves.
He misrepresented how many mining rigs were actually operational, effectively selling more hosting agreements than the company could support. "While some investors received returns, others suffered substantial losses," the complaint stated. He either knew or was reckless in not knowing that the company could not meet the obligations tied to the hosting agreements.
The U.S. Securities and Exchange Commission (SEC) charged a bitcoin miner for defrauding investors out of $48.5 million. According to the complaint, he misused the funds for gambling, cryptocurrency purchases, and gifts to family members while misleading investors about the operations of his business.
SEC: Family members received misappropriated funds
In addition to the misappropriation, he allegedly transferred $5 million to family members, including his ex-wife, mother, brother, and sister, the commission said. He reportedly left the U.S. with the remaining misappropriated funds following his divorce in November 2021.
Several family members are named as relief defendants in the lawsuit and have consented to disgorge the funds they received, pending court approval, per the SEC. VBit was acquired by Advanced Mining Group in 2022 and is now defunct. The action seeks disgorgement of ill-gotten gains, civil penalties, and a ban on the bitcoin miner from participating in future securities offerings.
Key Takeaways
- The U.S. Securities and Exchange Commission has charged a bitcoin miner for defrauding investors out of $48.5 million.
- The bitcoin miner allegedly misused the funds for gambling, cryptocurrency purchases, and gifts to family members.
- The action seeks disgorgement of ill-gotten gains, civil penalties, and a ban on the bitcoin miner from participating in future securities offerings.
Conclusion and What to Watch Next
The SEC said they want this alleged conduct to be a reminder that investors should carefully evaluate claims of passive income from crypto and confirm that operations are transparent and verifiable.
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