The South Philadelphia-based company that previously promised investors large profits is now a Ponzi scheme. Jesse Bunch, a Pittsburgh Post-Gazette journalist, tweeted about a crypto scam that a Philadelphia-based Bitcoin mining firm is facing a securities fraud case after denying thousands of its clients access to over $11 million in cryptocurrencies. It is Pennsylvania’s worst scandal of its kind; let’s take a deeper look.
Pennsylvania’s Largest Crypto Scam
On September 7, Pennsylvania educator Mayama Kesselly admitted she was skeptical when a coworker urged her to invest in one of the world’s most volatile financial markets: cryptocurrency, which has won the admiration of Silicon Valley CEOs and prominent Hollywood figures. She and her husband went all-in after her initial investment in VBit Technologies, a cutting-edge bitcoin mining company founded by a flamboyant Philadelphia entrepreneur, began to generate substantial profits last spring.
The Bristol couple borrowed $50,000 to buy the company’s top-of-the-line “Black Diamond” mining package, earning up to $9,000 per month. Over time, Ms. Kesselly earned a reputation as a VBit evangelist, recruiting friends through the company’s pyramid-style “affiliates” scheme and investing her earnings into additional packages rather than repaying her initial payment. It was a decision she would later come to regret deeply.
Don Vo, the 34-year-old CEO of VBit, had vanished by January after selling the company for $105 million to a Chinese corporation that had not revealed its ownership on public documents. As a result, customers were denied access to millions of dollars in bitcoin in what has become Pennsylvania’s largest cryptocurrency scandal.
Vbit Technologies Sued Over Crypto Scam
Morgan C. Huntley filed a lawsuit against ten unnamed individuals and ten unidentified corporations, as well as Vbit Technologies Corp, alleging that the defendants engaged in a cryptocurrency scam in which they misled investors like the plaintiff by promising rewards. According to the lawsuit, the plaintiff allegedly spent more than $200,000 on four contracts related to the defendants’ cryptocurrency fraud. In June 2022, the plaintiff allegedly discovered they could no longer access the assets in their Bitcoin wallet.
The complaint alleges that, in addition to violating Delaware law and the Securities Exchange Act, the defendants committed securities fraud and common law fraud.
Investors Can’t Withdraw Thousands from Account
According to complaints filed in the United States, the firm that previously promised investors large profits is now being investigated by state financial regulators. A federal lawsuit and the Securities and Exchange Commission both allege serious securities fraud and a Ponzi scheme. Customers claimed that the abrupt change in ownership triggered a months-long downward spiral culminating in the denial of access to their computers and cryptocurrencies.
A corporation with its headquarters in busy South Philadelphia attracted over 100 Pennsylvanians among the growing number of angry and dissatisfied customers. Around 15,000 investors worldwide, including Ms. Kesselly, her husband, and their friends and coworkers, are attempting to reclaim bitcoin worth more than $11 million currently held in company-controlled accounts. These investors have thousands of dollars in these accounts that are inaccessible.
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