Case 1:22-cv-01164-UNA Document 1 Filed 09/02/22 Page 1 of 25 PageID #: 1
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`
`
`
`
`
` Case No.:
`
` CIVIL ACTION
`
` JURY TRIAL DEMANDED
`
`
`MORGAN C. HUNTLEY,
`
` Plaintiff,
`
` v.
`
`VBIT TECHNOLOGIES CORP., VBIT
`MINING LLC, ADVANCED MINING
`GROUP, DANH CONG VO a/k/a DON VO,
`KATIE VO, SEAN TU, JIN GAO, LILLIAN
`ZHAO, JOHN DOE INDIVIDUALS 1-10,
`and ABC COMPANIES 1-10,
`
` Defendants.
`
`
`COMPLAINT
`
`Plaintiff Morgan C. Huntley (“Plaintiff”), through his undersigned attorneys, brings this
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` 
`
`
`
`
`
`
`
`
`Complaint against defendants VBIT Technologies Corp. (“VBIT Tech”), VBIT Mining LLC
`
`(“VBIT Mining”), Advanced Mining Group (“Advanced Mining”), Danh Vo a/k/a Don Cong Vo
`
`(“Mr. Vo”), Katie Vo (“Ms. Vo”), Lillian Zhou (“Ms. Zhao”), Sean Tu (“Mr. Tu”), and Jin Gao
`
`(“Mr. Gao and, together with the foregoing defendants, the “Defendants”), for violations of federal
`
`securities laws and Delaware law. In support of this Complaint, Plaintiff alleges the following:
`
`
`
`NATURE OF THE ACTION
`
`1.
`
`In a “rug-pool” scheme that unfortunately has become common in the
`
`cryptocurrency industry, Defendants used the lure of profits from the mining of Bitcoin to defraud
`
`investors, including Plaintiff.
`
`2.
`
`Though shrouded in technological savvy and industry jargon, Defendants’ scheme
`
`was simple: they appear to have offered and sold unregistered securities composed of products
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`and services that did not exist in the form they said it did and, when their scheme inevitably
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`unraveled, they left Plaintiff high and dry.
`
`3.
`
`As a result of Defendants’ fraudulent scheme, Plaintiff has been damaged in the
`
`principal amount of $189,790.83, plus interest, lost profits, and other damages.
`
`4.
`
`Specifically, between March 19, 2021 and February 25, 2022, Plaintiff entered into
`
`four separate agreements with Defendants VBIT Tech, VBIT Mining, and Advanced Mining
`
`whereby Defendants would purportedly host physical Bitcoin mining equipment at facilities it
`
`owned, which in turn would allow Plaintiff to mine and procure units or subunits of the popular
`
`virtual currency known as Bitcoin. In exchange, Plaintiff paid Defendants more than $200,000
`
`dollars in purported hardware charges and hosting fees.
`
`5.
`
`According to Defendants, their mining equipment would allow investors such as
`
`Plaintiff to utilize computing power to “mine” for Bitcoin.1 By mining for Bitcoin using
`
`Defendants’ equipment, Plaintiff was told, Plaintiff would be rewarded with new Bitcoin, a unit
`
`of which is worth tens of thousands of dollars but varies depending on market conditions.
`
`6.
`
`In total, Plaintiff invested approximately $207,810 in U.S. and Bitcoin currency
`
`with Defendants in exchange for Defendants’ purported equipment and “hosting” services.
`
`7.
`
` In or about June 2022, Plaintiff discovered that he was unable to make withdrawals
`
`of Bitcoin from his “virtual wallet,” which was located in an online dashboard hosted by
`
`Defendants.
`
`8.
`
`Though Defendants chalked it up to mere technical glitches described as “batching
`
`issues,” upon information and belief, Plaintiff’s so-called individualized “virtual wallet” appears
`
` 
`1  “Mining” for virtual or cryptocurrency entails applying great amounts of computer power to solve complex
`algorithms or equations that verify “blocks” of transactions in the particular cryptocurrency — here, Bitcoin.
`
`2 
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`to be nothing but a smokescreen — upon information and belief, it was merely numbers contained
`
`in a virtual database and not individualized units of Bitcoin associated with individual customers.
`
`9.
`
`Upon information and belief, Defendants were not offering and maintaining
`
`individualized, hardware-hosted mining services to Plaintiff and other investors, as they
`
`represented; rather, Defendants either were engaged in “cloud mining,” or a similar arrangement
`
`whereby customers’ computing power—dubbed a “hash rate”—is pooled together and wholly
`
`unrelated to the physical products and service they are purportedly being sold.
`
`10.
`
`Thus, Plaintiff was promised individualized, specialized, cutting edge computer
`
`technology touted by Defendants as capable of producing hefty returns, upon information and
`
`belief, Plaintiff never received the individualized mining equipment and services that he paid for;
`
`rather, upon information and belief, Plaintiff’s $207,810 investment was pooled with investments
`
`from other customers, and the Bitcoins appearing in Plaintiff’s “virtual wallet” were mere
`
`investment returns arbitrarily determined by Defendants.
`
`11.
`
`Upon information and belief, Defendants’ fraudulent scheme unraveled when the
`
`market price of Bitcoin began to tumble in April 2022. It was only after the price of Bitcoin
`
`dropped precipitously did Plaintiff lose control over his “Advanced Mining”—hosted dashboard,
`
`which prevented and continues to prevent Plaintiff from making withdrawals from his so-called
`
`virtual wallet.
`
`12.
`
`Defendants’ activities have all the markings of a Ponzi scheme cloaked in
`
`technological sophistication. Upon information and belief, Defendants sold far more computing
`
`power than they pooled, owned, or leased from third parties, they impermissibly used for their
`
`benefit Bitcoin that was supposed to be earmarked solely for Plaintiff, and they presently owe
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`Plaintiff and other investors returns far in excess of what they were making on their mining
`
`operations.
`
`13.
`
`As discussed more fully below, all of the Defendants have engaged in securities
`
`fraud and common law fraud, in violation of Delaware law and the Securities Exchange Act of
`
`1934 (the “Securities Act”). Further, Mr. Vo, Ms. Vo, Ms. Zhou, Mr. Tu, and Mr. Gao (the
`
`“Individual Defendants”) are all culpable participants in Defendants’ fraudulent scheme,
`
`committing acts of misfeasance such that the Individual Defendants should be held personally
`
`liable for the misconduct of VBIT Tech, VBIT Mining, and Advanced Mining (collectively, the
`
`“Entity Defendants”).
`
`
`
`JURISDICTION AND VENUE
`
`14.
`
`This Court has jurisdiction over the subject matter of this action under the Securities
`
`Act, 15 U.S.C.A §77o and 28 U.S.C.A. § 1331. Plaintiff’s claims arise under Sections 10(b) and
`
`15 of the Securities Act, 15 U.S.C. §§ 78k(b) and 78t(a). This Court has supplemental jurisdiction,
`
`under 28 U.S.C. §1367, over all remaining state common law claims.
`
`15.
`
`The contractual agreements referenced herein and the products and services sold
`
`thereunder, i.e., Defendants’ “hosting services” and “mining equipment,” constitute investment
`
`contracts and securities, respectfully, under Section 3(a)(10) of the Securities Act, 15 U.S.C.A. §
`
`78c, because they are investments in common ventures premised on a reasonable expectation of
`
`profits to be derived primarily from the entrepreneurial or managerial efforts of others.
`
`16.
`
`Separately, this Court independently has jurisdiction over the subject matter of this
`
`action under 28 U.S.C.A. § 1332(a)(1) because, upon information and belief, the parties are
`
`citizens of different States and the amount in controversy exceeds $75,000, exclusive of interest
`
`and costs.
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`17.
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`Venue is proper in this District under 28 U.S.C.A. § 1391 because the underlying
`
`investment contracts entered into by the parties requires that venue shall be located in this District.
`
`18.
`
`Defendants utilized interstate commerce to advance their fraudulent scheme.
`
`
`
`THE PARTIES
`
`19.
`
`Plaintiff Morgan C. Huntley is a competent adult individual with an address located
`
`at 1 Washington Street, Newport, Rhode Island 02840.
`
`20.
`
`Defendant VBIT Tech is a Delaware corporation with a principal place of business
`
`located at 1625 Washington Avenue, Philadelphia, Pennsylvania 19146.
`
`21.
`
`Defendant VBIT Mining is a Delaware limited liability company with a principal
`
`place of business located at 1625 Washington Avenue, Philadelphia, Pennsylvania 19146. Upon
`
`information and belief, none of VBIT Mining’s members are domiciled in Rhode Island.
`
`22.
`
`23.
`
`According to Defendants, VBIT Mining is a direct subsidiary of VBIT Tech.
`
`According to Defendants, Defendant Advanced Mining is an “Asian-based,”
`
`foreign entity whose activities either are located at 1625 Washington Avenue, Philadelphia,
`
`Pennsylvania 19146, and/or who operates as the alter ego or instrumentality of VBIT Tech, VBIT
`
`Mining, and/or the Individual Defendants.
`
`24.
`
`Defendant Mr. Vo is a competent adult individual who, upon information and
`
`belief, resides at 1823 S. Dover Street, Philadelphia, Pennsylvania 19145. Mr. Vo was the Chief
`
`Executive Officer of VBIT Tech and VBIT Mining until in or about January 2022.
`
`25.
`
`Defendant Ms. Vo is a competent adult individual who, upon information and
`
`belief, resides at 1823 S. Dover Street, Philadelphia, Pennsylvania 19145.
`
`26.
`
`Defendant Mr. Tu is a competent adult individual who, upon information and belief,
`
`resides at 1390 Braun Court, Eagon, Minnesota 55123. Mr. Tu is the former Chief Technology
`
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`Officer of VBIT Tech and VBIT Mining, and present Chief Operating Officer of Advanced
`
`Mining.
`
`27.
`
`Defendant Mr. Gao is a competent adult individual who works at 1625 Washington
`
`Avenue, Philadelphia, Pennsylvania 19146 and, upon information and belief, resides in
`
`Philadelphia, Pennsylvania. Mr. Gao holds himself out as the Vice Chairman of Advanced
`
`Mining.
`
`28.
`
`Defendant Ms. Zhao is a competent adult individual, the current Chief Executive
`
`Officer of Advanced Mining and, upon information and belief, resides in Philadelphia,
`
`Pennsylvania.
`
`FACTUAL ALLEGATIONS
`
`Cryptocurrencies, Bitcoin, and Mining
`
`
`A.
`
`29.
`
`Bitcoin is the World’s first and most popular cryptocurrency, which is a
`
`decentralized digital medium of exchange and store of value.
`
`30.
`
`Bitcoin relies on a technology called the “blockchain,” which is a decentralized
`
`public ledger of all transactions in a particular cryptocurrency. By utilizing the blockchain, Bitcoin
`
`is able to avoid centralized private and government control.
`
`31.
`
`Tracking and validating the blockchain, i.e., Bitcoin transactions, requires powerful
`
`computers that solve complex algorithms and equations.
`
`32.
`
`Units of Bitcoin are generated and rewarded to miners when their computers solve
`
`the algorithms that validate Bitcoin transactions.
`
`33.
`
`As Bitcoin’s popularity grew, competition among miners increased and more
`
`computer processing power was required in order for a miner to solve a block and be rewarded
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`with a unit of Bitcoin.
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`34.
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`In turn, Bitcoin mining enterprises began to form, which offered customers simple,
`
`efficient, and hands-free access to computing power.
`
`B.
`
`VBIT and its Known Principals
`
`35.
`
`VBIT Tech and VBIT Mining (collectively, “VBIT”) were formed in 2018 to rent
`
`and sell Bitcoin mining equipment and “hosting” services to customers by utilizing a multi-level
`
`marketing scheme.
`
`36.
`
`VBIT’s pitch was simple: they would offer two primary products and services: (a)
`
`computer hardware, or “hashboards” specialized for Bitcoin mining, and (b) so-called “hosting”
`
`services, which would enable customers to mine Bitcoin with little to no effort. As VBIT
`
`advertised on its website, “[y]ou don’t need to do anything regarding the setup or maintenance of
`
`your hardware. We take care of logistics, installing and updating software, providing affordable
`
`electricity, and keeping your equipment cool and in working order.”
`
`37.
`
`Further, through marketing and advertising, VBIT represented to customers,
`
`including Plaintiff, that it “operate[s] some of the largest and most efficient mining facilities in the
`
`world, with unprecedented access to clean, cheap power and expert staff.”
`
`38.
`
`Thus, VBIT advertises to the public—Plaintiff included—that it would host its
`
`customers’ individualized computer hardware in its world-class datacenters, that its customers
`
`would not need to actively participate in the mining of Bitcoin, and in exchange the customer
`
`would be required to pay VBIT a fee to cover operational and other costs.
`
`39.
`
`Though VBIT’s ownership and operational structure is murky, upon information
`
`and belief, Mr. Vo co-founded VBIT and was VBIT’s Chief Executive Officer from its founding
`
`in 2018 through January 2022.
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`40. Ms. Vo, Mr. Vo’s wife, has been touted as an integral part of VBIT’s formation and
`
`operational development.
`
`41. Mr. Tu was VBIT’s Chief Technology Officer, and presently serves as the Chief
`
`Operating Officer of Advanced Mining. According to Mr. Tu’s LinkedIn profile, Mr. Tu sought
`
`to provide VBIT customers with “the technology, infrastructure, services and support than enables
`
`them to be successful miners and achieve their financial goals.”
`
`42.
`
`Upon information and belief, Mr. Gao is a co-founder of VBIT and presently serves
`
`as Advanced Mining’s “Vice Chairman.”
`
`43. Ms. Zhao is advertised as the current Chief Executive Officer of Advanced Mining.
`
`C.
`
`Plaintiff Enters Into “Hosting” Agreements with VBIT
`
`44.
`
` Relying on Defendants’ advertising and marketing pitches, Plaintiff entered into
`
`a series of “Payment and Hosting Agreement Contract”[s] (collectively, the “Agreements”) with
`
`VBIT.
`
`45.
`
`On March 19, 2021, Plaintiff, as customer, and VBIT Tech and VBIT Mining, as
`
`“service provider,” entered into the first in a series of such Agreements (the “March 2021
`
`Agreement”). A true and correct copy of the March 2021 Agreement is attached hereto as Exhibit
`
`“A” and incorporated herein by reference.
`
`46.
`
`Under the March 2021 Agreement, Plaintiff paid $110,778 in exchange for
`
`Defendants’ hardware, and an “initial fixed hosting term” of one year. Exhibit “A” at p.1.
`
`47.
`
`In the March 2021 Agreement, VBIT represented that it would be utilizing
`
`individualized mining equipment for the benefit of Plaintiff:
`
`The first payment will be due 30 days after the first day your
`equipment is installed and actively running . . . .
`
`
`***
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`
`
`1. Service.
`1.1
`Facility. Service Provider will provide server hosting
`facility, electrical power, and Internet access to Customer at Service
`Provider’s and partner facilities (the “Facility”) for the purpose of
`installing, maintaining, and operating Customer’s leased or
`owned servers and ASIC chips (the “Equipment”), which may be
`updated from time to time to add or delete Equipment with written
`notification to the Customer.
`
`
`Exhibit “A” at pp. 1,3 (emphasis added).
`
`
`48.
`
`Under the March 2021 Agreement, Plaintiff leased Bitcoin mining equipment from
`
`VBIT, but also had the option to purchase the equipment for $1, plus shipping and handling fees:
`
`Use and leasing rights with a buyout option to:
`
`Black Diamond Package consisting of dedicated Antminer S19
`series computer server hashboards with an average of 880,000 GH/s
`computer computational power . . . .
`
`
`***
`
`. . . Customer can execute buyout option on Equipment referenced
`above at any time by submitting a written request of buyout
`execution and shipment of said equipment. Upon such request,
`Customer shall pay the shipping and handling fee described in
`section 2.1 of this agreement in additional to a $1.00 USD buyout
`and the balance of all payments described above.
`
`
`Exhibit “A” at p.1,2.
`
`
`49.
`
`Despite the foregoing provisions, however, Defendants sought to limit Plaintiff’s
`
`access to his equipment and the facility in which it is supposedly located. See Exhibit “A” at §
`
`5.2 (“Only those persons specifically authorized by Service Provider may access the Facility”).
`
`50.
`
`Under the March 2021 Agreement, Defendants had total control over Plaintiff’s
`
`equipment. See, e.g., Exhibit “A” at § 6 (titled “Removals and Relocation of Equipment”).
`
`51.
`
`Plaintiff has paid Defendants the full contract price—$110,778 in both U.S.
`
`currency and Bitcoin—under the March 2021 Agreement.
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`52.
`
`On April 1, 2021, Plaintiff renewed the March 2021 Agreement for an additional
`
`one-year term, in exchange for payment in the amount of $20,981.
`
`53.
`
`On August 23, 2021, Plaintiff and VBIT entered into a second “Purchase and
`
`Hosting Agreement” (the “August 2021 Agreement”). A true and correct copy of the August 2021
`
`Agreement is attached hereto as Exhibit “B” and incorporated herein by reference.
`
`54.
`
`Under the August 2021 Agreement, Plaintiff purchased a “gold” package from
`
`Defendants, which included mining equipment and hosting services for a one-year term, for
`
`$10,779.
`
`55.
`
`Plaintiff has paid Defendants the full contract price—$10,779 in Bitcoin—due and
`
`owing under the August 2021 Agreement.
`
`56.
`
`On October 27, 2021, Plaintiff and VBIT entered into a third “Purchase and Hosting
`
`Agreement” (the “October 2021 Agreement”). A true and correct copy of the October 2021
`
`Agreement is attached hereto as Exhibit “C” and incorporated herein by reference.
`
`57.
`
`Under the October 2021 Agreement, Plaintiff purchased a “black diamond”
`
`package, which included mining equipment and hosting services for a one-year term, for $139,699.
`
`58.
`
`Plaintiff has paid Defendants the full contract—$139,699 in U.S. currency—due
`
`and owing under the October 2021 Agreement.
`
`D.
`
`VBIT’s Murky Acquisition By “Advanced Mining”
`
`59.
`
` In late January 2022, VBIT announced that it had been acquired by a company
`
`called Advanced Mining for $105 million.
`
`60.
`
`In a press release authored by VBIT, Advanced Mining was identified as “an Asian-
`
`based company primarily focused on bitcoin mining . . . .” A true and correct copy of the January
`
`31, 2022 press release is attached hereto as Exhibit “D”.
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`61.
`
`In the press release, VBIT touts “Advanced Mining” as a company that has been
`
`“thriving in the crypto mining sector since 2015 and operating 12 data centers dedicated to bitcoin
`
`mining in Europe and Asia.” Id.
`
`62.
`
`VBIT also stated that it was operating 27,000 Antminer S19 series and S17 series
`
`out of five data centers “spreading across the globe in the United States, Canada and Kazakhstan.
`
`. . .” Id.
`
`63.
`
`Despite the information contained in the press release, upon information and belief,
`
`Advanced Mining is not—nor has it ever been—registered to do business in any jurisdiction of the
`
`United States.
`
`64.
`
`Further, upon information and belief, Advanced Mining is a sham — the alter ego
`
`and/or instrumentality of VBIT Tech, VBIT Mining, and the Individual Defendants.
`
`65.
`
`For example, on June 18, 2022, the Securities Division for the State of Washington
`
`entered into a Consent Order (the “Consent Order”) with VBIT whereby VBIT admitted that its
`
`Bitcoin mining hardware and service packages were “securities,” and accordingly that its business
`
`practices violated the securities laws of the State of Washington. A true and correct copy of the
`
`Consent Order is attached hereto as Exhibit “E” and incorporated herein by reference.
`
`66.
`
`Notably, the Consent Order is dated almost six months after VBIT’s purported
`
`acquisition by Advanced Mining. Nevertheless, the “Advanced Mining” moniker appears
`
`nowhere in the Consent Order.2
`
`67.
`
`Even if Advanced Mining is a duly authorized legal entity, by operation of law as
`
`a result of concepts of successor liability, or de facto merger or consolidation, Advanced Mining
`
`assumed all the obligations of VBIT.
`
` 
`2  Though the Consent Order relates to conduct occurring in mid-2020, upon information and belief there is no
`corresponding consent order relating to Advanced Mining,
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`68.
`
`Advanced Mining conducts the same or substantially the same business that VBIT
`
`conducted before VBIT’s purported acquisition.
`
`69.
`
`Upon information and belief, VBIT and Advanced Mining have the same or
`
`substantially the same ownership.
`
`E.
`
`“Advanced Mining” Contracts with Plaintiff then Abruptly Defaults
`
`70.
`
`On February 25, 2022, Plaintiff entered into the fourth and final “Purchase and
`
`Hosting Agreement,” this time with “Advanced Mining” as the “Service Provider” and
`
`counterparty (the “February 2022 Agreement”). A true and correct copy of the February 2022
`
`Agreement is attached hereto as Exhibit “F” and incorporated herein by reference.
`
`71.
`
`Under the February 2022 Agreement, Plaintiff paid “Advanced Mining” $12,722
`
`in exchange for mining equipment and hosting services for one year. Id. at p.1,2.
`
`72.
`
`In or about June 2022, however, Plaintiff discovered that he was unable to make
`
`Bitcoin withdrawals from his “virtual wallet,” which was located in Defendants’ proprietary
`
`“Advanced Mining” dashboard.
`
`73.
`
`Though Defendants chalked it up to mere technical glitches—described as
`
`“batching issues”—upon information and belief, Plaintiff’s so-called individualized “virtual
`
`wallets” appears to be nothing but a smokescreen — mere numbers contained in a virtual database
`
`and not individualized units of Bitcoin associated with individual customers such as Plaintiff.
`
`74.
`
`Upon information and belief, Defendants were not offering and maintaining
`
`individualized, hardware-hosted mining services to Plaintiff and other investors, as they
`
`represented; rather, Defendants either were engaged in “cloud mining,” or a similar arrangement
`
`whereby customers’ computing power—dubbed a “hash rate”—is pooled together and wholly
`
`unrelated to the physical products and service they are purportedly being sold.
`
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`75.
`
`Thus, upon information and belief, Plaintiff never received the discrete,
`
`individualized mining equipment and services that he paid for; rather, upon information and belief,
`
`Plaintiff’s $207,810 investment was pooled with other investments, and the Bitcoins appearing in
`
`Plaintiff’s “virtual wallet” were mere investment returns arbitrarily determined by Defendants.
`
`76.
`
`Upon information and belief, Defendants’ fraudulent scheme unraveled when the
`
`market price of Bitcoin began to tumble in April 2022. It was only after the price of Bitcoin
`
`dropped precipitously did Plaintiff lose control over his dashboard, which prevented and continues
`
`to prevent Plaintiff from making withdrawals from his so-called virtual wallet.
`
`77.
`
`Defendants’ activities have all the markings of a Ponzi scheme cloaked in
`
`technological sophistication. Upon information and belief, Defendants sold far more computing
`
`power than they pooled, owned, or leased from third parties, and they presently owe Plaintiff and
`
`other investors returns far in excess of what they were making on their mining operations.
`
`78.
`
`As of the date of the Complaint, Plaintiff is unable to withdraw Bitcoin from his
`
`“virtual wallet,” despite Defendants’ representations that Plaintiff could withdraw all Bitcoin that
`
`he owned at any time.
`
`79.
`
`Upon further investigation, Plaintiff discovered that the Defendants were removing
`
`content that they posted to social media, including to LinkedIn, Facebook, YouTube, and similar
`
`platforms.
`
`80.
`
`On June 27, 2022, Advanced Mining informed its customers, including Plaintiff,
`
`that it “can no longer service the United States market.”
`
`81.
`
`As justification for this decision, Advanced Mining represented that it had entered
`
`into a consent order with the United States Securities Exchange Commission (the “SEC”);
`
`however, Advanced Mining produced a copy of the Consent Order from the State of Washington
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`— not the SEC. Further, Advanced Mining—which has been held out as a separate and distinct
`
`company—is not a counterparty to the Consent Order.
`
`82.
`
`On July 27, 2022, Plaintiff, through counsel, sent Advanced Mining a letter (the
`
`“Demand”) demanding the return of the $207,810 that he paid Defendants under the Agreements.
`
`A true and correct copy of the Demand is attached hereto as Exhibit “F”.
`
`83.
`
`84.
`
`85.
`
`To date, the Demand has not elicited a response.
`
`Plaintiff has fulfilled all conditions precedent to filing this Complaint.
`
`COUNT I
`Failure to Register Securities
`Section 5 and 12(a)(1) of the Securities Act
`(Plaintiff v. Defendants)
`
`Plaintiff repeats and incorporates the preceding paragraphs as if fully set forth at
`
`length herein.
`
`86.
`
`Section 5(a) of the Securities Act prohibits the direct or indirect use of any means
`
`or instruments of transportation or communication in interstate commerce, or of the mails, to sell
`
`securities through the use or medium of any prospectuses or otherwise; or to carry or cause to be
`
`carried through the mails or in interstate commerce, by any means or instrument of transportation,
`
`any security for the purpose of sale or for delivery after sale, unless a registration statement is in
`
`effect as to such a security.
`
`87.
`
`Further, Section 5(c) of the Securities Act makes it unlawful for any person to
`
`directly or indirectly make use of any means or instruments of transportation or communication in
`
`interstate commerce or of the mails to offer to sell or buy through the use or medium of any
`
`prospectus or otherwise any security, unless a registration has been filed as to such security.
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` 
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`88.
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`Correspondingly, Section 12(a)(1) of the Securities Act grants investors such as
`
`Plaintiff a private right of action against any person who offers or sells a security in violation of
`
`Section 5, providing:
`
`Shall be liable … to the person purchasing such security from him,
`who may sue either at law or in equity in any court of competent
`jurisdiction, to recover the consideration for such security with
`interest thereon, less the amount of any income received thereon,
`upon the tender of such security, or for damages if he no longer owns
`the security. 
`
`
` 
`15 U.S.C. § 771(a)(2).
` 
`
`89.
`
`From in or about March 2021 through the date of this Complaint, Defendants have
`
`unlawfully made use of means or instruments of transportation or communication in interstate
`
`commerce or of the mails for the purposes of offering, selling, or delivering unregistered securities
`
`in direct violation of the Securities Act.  
`
`90.
`
`Defendants are “sellers” and “offerors” within the meaning of the Securities Act
`
`because Defendants offered and sold their mining hardware and services packages to Plaintiff,
`
`among others, and further invested Plaintiff’s funds in “pool mining” and other VBIT and
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`Advanced Mining products and services. 
`
`91.
`
`The offer and sale of Defendants’ mining hardware and services packages
`
`constituted the offer and sale of unregistered securities under controlling federal law. Such mining
`
`hardware and services packages exhibit the following particular hallmarks of a security: (a) the
`
`investment of Plaintiff’s money was pooled into a common enterprise; (b) the success of the
`
`investment opportunities and any potential returns thereon were reliant on the activities of others,
`
`including Defendants; and (c) Defendants’ mining hardware and services packages were touted as
`
`having the potential for substantial passive returns that would require little to no effort on the part
`
`of Plaintiff.  
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` 
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`92.
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`Defendants’ mining hardware and services packages are both a horizontal common
`
`enterprise because, upon information and belief, the investments were pooled and under the control
`
`of Defendants, and a vertical common enterprise because, upon information and belief, Plaintiff’s
`
`returns on his investments are dependent on Defendants’ efforts. 
`
`93.
`
`Accordingly, Defendants have participated in the offer and sale of unregistered
`
`securities in violation of the Securities Act and are liable to Plaintiff for rescission and/or
`
`compensatory damages. 
`
`COUNT II
`Controlling Person Liability
`Violations of Section 15 of the Securities Act
`(Plaintiff v. Mr. Vo., Ms. Vo, Mr. Tu, Mr. Gao, and Ms. Zhao)
`
`Plaintiff repeats and incorporates the preceding paragraphs as if fully set forth at
`
`94.
`
`length herein. 
`
`95.
`
`Section 15 of the Securities Act provides for joint and several liability for
`
`“controlling persons” who had sufficient power or influence over an entity that committed
`
`Securities Act violations: 
`
`Every person who, by or through stock ownership, agency, or
`otherwise, or who, pursuant to or in connection with an agreement
`or understanding with one or more other persons by or through stock
`ownership, agency, or otherwise, controls any person liable under
`section 77k or 77l of this title, shall also be liable jointly and
`severally with and to the same extent as such controlled person to
`any person to whom such controlled person is liable, unless the
`controlling person had no knowledge of or reasonable ground to
`believe in the existence of the facts by reason of which the liability
`of the controlled person is alleged to exist.
`
`15 U.S.C. § 77o.
`
`96.
`
`Defendant Mr. Vo is subject to liability by virtue of his top-level executive position
`
`with VBIT, and the significant influence and supervisory authority over VBIT that he has touted
`
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` 
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`since in or about 2018. Mr. Vo co-founded VBIT and was VBIT’s Chief Executive Officer until
`
`it purportedly was “acquired” by Advanced Mining in January 2022. According to Mr. Vo’s own
`
`statements—as reflected in press releases and interviews given to the Philadelphia Weekly
`
`newspaper—Mr. VO developed VBIT and its operational and technological strategy. As a
`
`controlling person of VBIT, Mr. Vo knew of and actively participated in the sale of unregistered
`
`securities in direct violation of the Securities Act. 
`
`97.
`
`Similarly, Mr. Tu is subject to liability by virtue of his top-level executive positions
`
`with both VBIT and Advanced Mining, as well as his significant influence and supervisory
`
`authority over the Entity Defendants. Mr. Tu was the Chief Technology Officer of VBIT and
`
`presently serves as Advanced Mining’s Chief Operating Officer. Upon information and belief,
`
`Mr. Tu helped develop VBIT technology and was responsible for VBIT’s continued technical
`
`development. As a controlling person of VBIT and Advanced Mining, Mr. Tu knew of and
`
`actively participated in the sale of unregistered securities in direct violation of the Securities Act.  
`
`98.
`
`Further, Defendant Ms. Zhao—assuming she even exists—is subject to liability by
`
`virtue of her top-level executive position with Advanced Mining, and her significant influence and
`
`supervisory authority over Advanced Mining since it purportedly acquired VBIT. Ms. Zhao
`
`presently serves as Advanced Mining’s Chief Executive Officer and has issued numerous online
`
`statements concerning Advanced Mining’s operations. As a controlling person of VBIT, Ms. Zhao
`
`knew of and actively participated in the sale of unregistered securities in direct violation of the
`
`Securities Act. 
`
`99.
`
`Defendant Mr. Gao is subject to liability by virtue of his top-level executive
`
`position with VBIT and Advanced Mining. Mr. Gao co-founded VBIT and currently serves as
`
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` 
`
`“Vice Chairman” of Advanced Mining. As a controlling person of VBIT, Mr.