VBit Technologies, a South Philadelphia-based cryptocurrency mining company, has been accused of defrauding Bitcoin newcomers out of a large investment, claiming it was involved in a “massive Ponzi scheme.” Three new civil lawsuits have been filed by the House.
Pennsylvania and Delaware federal filings allege that VBit used complex pyramid-like marketing techniques to acquire new vulnerable customers. In exchange for these recruiting efforts, the company promised untrained investors to spend their accounts on luxury clothing, watches and exotic vacations.
The complaint also accuses company executives of lying to customers about their products, and one lawsuit suggests they were involved in extortion practices.
This development follows the collapse of cryptocurrency exchange FTX in November, filing for bankruptcy after the company, led by billionaire Sam Bankman-Fried, faced an $8 billion shortfall. It took place amidst a high-profile meltdown.
Headquartered in an unpretentious brick building on Washington Avenue, VBit Technologies says it was sold to Chinese firm Advanced Mining Group earlier this year. By June, when customers began to notice they were unable to access bitcoin in accounts managed by VBit, one of his former executives estimated that the company had about 15,000 investors worldwide. Did.
The company’s founder, 34-year-old Don Vo, disappeared from public view shortly after the sale was reported. Before that deal, VBit executives said in videos on his social media that the top performer was gifted a luxury sports car, privately sailed on his yacht, and dined at Philadelphia’s most expensive restaurant. I was proud to do it.
Lawyers representing VBit Technologies and its executives denied wrongdoing in response to a complaint filed in September. A lawyer for the company did not respond to a recent request for comment on the new complaint. No criminal charges have been filed.
A class action lawsuit filed in Delaware in November alleges that VBit “functioned as a massive Ponzi scheme that paid out promised bitcoin as long as new victims provided additional funds.”
The lawsuit, filed by two Philadelphia men, Ross Dettmeling and Francis Mangbutt, is one of three to be filed in Delaware’s only federal court this fall. In Philadelphia, plaintiff Michael Enno alleges fraud in a complaint filed in October in the Eastern District Court of Pennsylvania.
No trial date has been set, but the case, filed in September, was assigned to a magistrate on Tuesday.
Josh Snyder, attorney for Dettmering and Mangubat, said: “The client’s complaint alleges that the defendant companies and individuals lured innocent victims with false promises that they could safely obtain cryptocurrency through bitcoin mining. It claims to have formed an illegal enterprise, including “Thousands of victims believe they were deceived and harmed by the defendant’s scheme, as alleged in the complaint, and we intend to vigorously pursue this lawsuit to establish their rights. ”
Founded in 2018, VBit promised investors that a high-performance Bitcoin mining computer would bring passive monthly income. The package could cost up to $58,000, including a computer the company claims he leases and maintains at one of its remote hosting facilities.
However, in the Dettmering and Mangubat lawsuit, their attorneys argued that the promise was “totally fake” and that VBit generated bitcoin payments from newly acquired customer funds rather than the mining computers themselves. criticized.
According to the filing, the man purchased mining packages and hosting services worth a total of $216,000. Large investments like this are common, with other customers taking out thousands of dollars in loans to purchase packages. Speaking to the Pittsburgh Post-Gazette Their money remained frozen, so they were struggling to pay off their debts.
For more ambitious customers, whom VBit considered “affiliates,” VBit offered cash bonuses for registering family and friends as new investors, the filing shows. Washington state regulators have noted that many of these so-called affiliates have no cryptocurrency experience in order for VBit to repay investors in that state.
Affiliates not only have the chance to earn more money through faster bitcoin mining speeds, but also bonuses that include 5,000 purchases, an island vacation, a luxury sports car, and a mansion pledge worth $1.5 million. promised to increase in size. New investment of $200 million.
“We encourage you to purchase items that we call conversation starters,” said a VBit salesperson while talking to affiliates in a recruitment video posted on the company’s YouTube. Women buy Christian Louboutin shoes and Chanel purses.
“It’s only natural for them to ask, ‘What do you do for a living, what kind of work do you do?'” “The moment they ask for it, it’s your opportunity to introduce them to your business and hopefully recruit them.”
Counsel for Dettmering and Mangubat are currently seeking unspecified damages and the client’s legal costs.
The filing also characterizes the sale to Chinese firm Advanced Mining Group as a “bogus deal.”
To date, Advanced Mining Group’s records are not available in public databases, and the company’s chief executive, Lillian Zhou, has not responded to repeated requests for comment.