VBit Reneges on Bitcoin Mining Agreements Class Action

Bitcoin mining can be profitable because it creates more Bitcoin. This class action sues VBit Technologies Corp., VBit Mining, LLC, Advanced Mining Group, and a group of individuals which purported to perform Bitcoin mining operations for individuals for a price. Instead, the complaint alleges they engaged in breach of contract, conversion, and fraud, as well as possibly running a Ponzi scheme.

The class for this action is all persons who entered into a Payment and Hosting Contract or similar agreement with one or more of the defendants in this case, whose contract was in force when the defendants uniformly stopped performing under the contracts in or around June 2022.

Cryptocurrencies like Bitcoin use blockchain technology to create a long-chain ledger system to record cryptocurrency transactions. Cryptocurrency mining is a process that prevents double-spending, that is, the spending of the same currency twice.

In the mining process, the complaint says, “a computer must solve a complex puzzle to authenticate each transaction and add it to the growing blockchain.” The first “miner” to solve the puzzle is rewarded with cryptocurrency.

The plaintiff in this case, Michael Enno, had done cryptocurrency mining on his own, but the complaint alleges he wanted a way to do it more cheaply and easily. VBit offered packages that purportedly performed Bitcoin mining.

Before signing an agreement, Enno visited the company’s office in Philadelphia, allegedly spending nearly a day there. In March 2021, he signed a Payment and Hosting Agreement Contract with VBit Technologies and VBit Mining. He bought VBit’s “Diamond” package, which the complaint alleges required a down payment of $24,314 and then monthly payments of $675.39.

The complaint alleges that this supposedly got him three years of hosting services, the lease of computer hardware powerful enough for mining, and a “wallet,” or account that would hold his Bitcoin. VBit, the complaint alleges, had control of the equipment.

In January 2022, VBit was purportedly acquired by Advanced Mining. “At this time,” the complaint alleges, “it is not clear whether Advanced Mining is a legitimate entity or a scam.”

Sometime around June 2022, the complaint says, Enno found he could not withdraw Bitcoin from his wallet with the company. Initially, the complaint alleges, he was told this was a temporary technical glitch they would fix, but his wallet has not been unfrozen.

On June 27 and July 6, 2022, the complaint alleges, the company told its customers via email that it would no longer be working in the US market. The complaint alleges, “Defendants announced they are no longer operating and maintaining computers and thus they are not performing the services that they promised they would perform under the contracts.” The company has refused Enno’s demands to return his money, the complaint claims, and the Philadelphia offices “are now shuttered and empty.”

The complaint asserts that the operation “ha[s] all the markings of a Ponzi scheme[.]”

Article Type: Lawsuit
Topic: Fraud
Tags: Breach of Contract, Conversion, Cryptocurrency, Fraud, Unjust Enrichment