SEC says Bitcoin mining hosting deals may qualify as securities in recent lawsuit

The US Securities and Exchange Commission (SEC) recently stated in a lawsuit against VBit Technologies and its founder Danh Vo that third-party Bitcoin mining hosting agreements could be classified as securities under federal law. The SEC alleges VBit defrauded investors between 2018 and 2022 by overselling mining contracts and misappropriating funds. The commission argues these hosting offerings meet the criteria of an “investment contract” as defined by the Howey test, meaning investors expected profits from VBit’s efforts without controlling the mining rigs themselves.

The SEC contends VBit’s contracts were offered and sold in exchange for money, constituting investments in a common enterprise where investors relied on Vo’s efforts for profit. This view could set a precedent for similar passive mining arrangements. While some argue Bitcoin mining is a commodity, not a security, the SEC’s position is significant.

This stance represents a shift from the SEC’s approach during the Biden administration under Gary Gensler, which aggressively pursued crypto enforcement cases. The current administration, led by pro-crypto chair Paul Atkins, has taken a more lenient approach, withdrawing or staying many previous cases and rescinding restrictive guidance like SAB 121.

(Source：Invezz)