Potential Scam/Rugpull Alert: Hosted Bitcoin Mining Company Advanced Mining Group, Formerly VBit Technologies, Stops Paying Out Their Miners
Unfortunately, for me and thousands of other BTC miners, I was wrong. I think the theory in my original article about VBit Technologies being cloud mining disguised as hosted mining was in fact correct. There’s a TON of skepticism and conspiracy theories floating around amongst the miners with Advanced Mining right now but here’s what I know…
- VBit Technologies was “acquired” by a company called Advanced Mining Group around the end of January/early February 2022. I use quotes because there is still no information on Advanced Mining Group ever existing prior to this “sale”. The rumored sale price was $105M (according to the company’s own press release). The advancedmining.io domain was purchased in November 2021 and the website wasn’t functional until February 2022. So far no one that I’m aware of has ever heard from nor seen the CEO, Lillian Zhou. It is now widely assumed the original founders of VBit Technologies saw the writing on the wall and this is a shell company.
- Regardless of this business change, my hosting services continued to be billed as “BUSINESS TO BUSINESS ACH WAV*VBIT TECHNOL” through May 2022.
- Advanced Mining/VBit Technologies used an MLM pyramid-like system to attract new customers/miners.
- Advanced Mining/VBit Technologies has been in business and for the most part, working without a hitch since 2018 catering to about 15,000 customers and housing approximately 27,000 mining machines.
- The founders of VBit including Dahn Vo and Jin Gao, along with CTO Sean Tu, were involved in a rug-pull crypto project called TOMI token. Marketing was heavily targeted toward VBit Members. It is now considered a dead project, but the website is still up if you want to see it.
- On May 23, 2022, Advanced Mining announced new COO, Ted Mucellin. On June 15, 2022, Advanced Mining announced Ted Mucellin has decided not to continue his journey as COO. On June 29, 2022, Advanced Mining announced new COO, Sean Tu.
- Around mid-May 2022, BTC withdrawals from miners were getting delayed by days or weeks being described as a “batching” issue or technical glitch. On or around June 1st all withdrawals were never processed and remained in batching mode. This exposed the wallets as just being numbers in a MySQL database rather than actual BTC in our accounts.
- On Monday, June 27th, the Advanced Mining office located at 1625 Washington Ave, Philadelphia, PA 19146 closed due to “COVID”.
- It appears Advanced Mining / VBit Technologies is “cleaning the internet” by removing content posted to social media. The YouTube videos posted on my original article are now private. The official Advanced Mining Telegram group has been closed and posts deleted. VBit CEO Don Vo has changed his Twitter username to a generic BTC mining account for some strange reason.
- On Monday, June 27, 2022, an email sent from Advanced Mining stated the following…
Dear Valued Advanced Mining Member,
First and foremost, we thank each of you for your patience with us over the last several weeks. The feedback that we have received from everyone has not been ignored.
Advanced Mining has positively impacted many lives during its few years in operation. Therefore, it saddens us to inform you that we can no longer service the United States market.
Without over-disclosing, in summary, our team has worked diligently with multiple law firms to ensure that our products and services are not unregistered securities. However, the United States Securities and Exchange Commission (US SEC) disagrees; therefore, Advanced Mining must take measures to abide by US SEC and applicable laws. As a result, we stopped all sales and withdrawals because of a potential pending settlement with the US SEC. During this process, bitcoin mining for clients outside the US may continue normally. After completing our potential pending settlement with the US SEC, we look forward to resuming our global services to clients outside the US and other restricted countries.
In the meantime, we have permission to process all withdrawal requests submitted by June 1, 2022. We will start to process those withdraws by an estimated target date of June 28, 2022. Other withdrawals will resume when Advanced Mining completes all the tasks needed in compliance with the US SEC as part of the potential pending settlement.
As part of the potential pending settlement with the US SEC, US customers may fall under two scenarios:
US customers who earned more than what they originally paid to VBit/Advanced Mining will keep their earnings and must relinquish ownership of their mining hardware.
US customers who have not yet earned more than what they originally paid to VBit/Advanced Mining have two options to choose from:
Keep ownership of their hardware and have it shipped to them at their expense. Advanced Mining will pro-rate and refund any unused pre-paid hosting services.
Relinquish their hardware ownership to receive a full refund of all monies paid minus any commissions and mined bitcoins.
NOTE: our team will reach out to these customers to capture their choice. If you fall under scenario #2, please be on the lookout for this.
After completing all tasks to comply with this potential pending settlement, services and sales to clients outside the US will resume as normal.
We understand that this announcement is unexpected and shocking. However, we ask US members to please refrain from opening support tickets if they fall under the second category; our team will reach out so to capture everyone’s choice in a timely and orderly manner.
We ask that everyone please bear with us as we try our best to continue servicing everyone and processing the mass volume of requests we have received. We again would like to thank everyone for their continued support as we overcome this hurdle. We thank you for choosing to mine with Advanced Mining and hope you enjoy the rest of your week.
Sincerely,
Advanced Mining Group
This PDF file was attached to the email.
Now there are more questions than ever. Why did they attach a consent order from the Washington State Department of Financial Institutions? Where’s the SEC order? It’s odd to me that they would encompass the entire US in this Washington order and say it was the SEC.
I personally contacted the attorney on the case for the Washington State Department of Financial Institutions, Adam Yeaton. He was extremely kind and informative. I was told someone with VBit Technologies filed a complaint to his department and he looked into it which sparked this whole fiasco. He went on to add that they are in no way affiliated with the Federal SEC. I then asked what he would do if he were in my shoes as a miner with VBit. Obviously, this is not legal advice and he’s not my lawyer, but he did mention that he would probably file a complaint with my local state securities regulator as well as with the SEC Whistleblower tip website. Just Google “local state securities regulator for (Insert Your State Here)” to find where to file a complaint with your local state regulators. I then asked about the FBI IC3 Complaint Form and he mentioned it probably wouldn’t be as effective, but it’s worth a try. With that said, I’m attaching my complaint below to make it easier for other fellow miners to file their complaints. If in fact, they are being honest with us about the SEC order then filing a complaint should simply provide verification. Feel free to copy and paste if you’d also like to file. Remember to change my specific details (in bold) to yours. Obviously, you can add relevant information where you see fit. Feel free to remove or change the last part where I mention my article. I thought if they wanted more information, that would be a good place to start.
In March of 2021, I entered into a contract with a hosted Bitcoin mining company called VBit Technologies, located at 1625 Washington Ave Philadelphia, PA 19146. VBit Technologies supposedly sold their business at the end of January 2022 to a company called Advanced Mining. I say supposedly because there are a lot of questions surrounding the sale of the company and if it actually happened. Everything seemed to go downhill once the supposed sale happened. I am of the belief that Advanced Mining is a shell company and VBit Technologies is doing business as Advanced Mining. To avoid confusion, since the contract is with VBit Technologies, I will refer to the company herein simply as VBit. The contract stated I was to purchase Bitcoin mining equipment (eight Antminer Bitmain S19 Pros referred to as a Black Diamond Package) and hosting services (including warehouse space, electricity, setup, and a warranty) for three years for $129,674 in total. I paid 50% up front, $64,837, plus $1826.03/month for three years of service for a total of $86,749.36 through May 2022. I’ve included the transactions from my bank account in the attachments. Around mid-May of 2022, the miners with VBit, including myself, started to notice delays in receiving their Bitcoin withdrawals. Initially, VBit claimed a technical issue was preventing them from sending out the Bitcoin payments. The transactions went in a “batching” status sometimes taking days or weeks to go through. After June 1st, 2022 no further withdrawals of miner Bitcoin funds were sent. Then on June 27th, 2022, we received an email stating the reason for the delays was due to a pending SEC settlement and they had to cease operations in the United States (see attached email notice). Please note that the email attached a document from the Washington State Department of Financial Institutions and NOT the SEC. It went on to state some options that essentially breach and ends the contract that are not suitable for most United States residents, including myself. Most miners who signed up within the last year or two will be losing thousands if they accept the terms of what they are currently offering. The contract clearly states that the hardware is being paid for, the mined Bitcoin is ours, and upon completed terms, we are able to continue the hosting with VBit or move our machines elsewhere. VBit now seems to be changing the terms of the contract with unsatisfactory conditions. If the company wants to terminate the contract due to some pending SEC order, they should provide a fair option for its users, including myself. The way they are calculating the refunds/buyouts of their miners is unacceptable. There are concerns and a great deal of speculation by many in the VBit community (we have an online forum where we communicate) that the reason this situation has happened is because of their pyrmid-like MLM business model collapsing when the cryptocurrency market declined or over-leveraging our Bitcoin. The use of our Bitcoin or mining hardware was not permitted as per our contract.
Another reason we are leary is because the same founders of VBit were behind a rug-pull cryptocurrency project toward the end of 2021 called “TOMI Token”. TOMI was heavily marketed toward users of VBit and is now a dead project. I’m aware of multiple people who have lost thousands investing in TOMI.
I’ve included the purchase transaction history, the contract with VBit, and the email with Washington Securities order. I am one of many who put in thousands of dollars into this company. There are many international customers who are also locked out despite VBit’s claim that they want to continue providing services to customers outside of the United States. Please look into this matter at your earliest convenience to make sure no illegal activity led to the current situation we are in.
If you’d like further details on VBit, please see the article I wrote on them when I originally did my due-dilligence: https://snrpro.medium.com/is-vbit-mining-technologies-a-scam-or-legit-my-review-of-the-hosted-bitcoin-mining-company-8ad8a93e889e
Don’t forget to attach your contract with VBit/AM along with your transaction history or receipts, and the email they sent on June 27th stating they will confiscate our machines (with the pdf attachment from Washington). Let’s pray we all get out of this whole. 🙏
If you’d like to continue to follow this story, I’ll be posting updates on my Twitter.
Update: New Email From AM (July 6, 2022)
One day after my article was released a new email has just been sent to customers, seemingly addressing some concerns. It’s interesting to say the least.
Dear Valued Advanced Mining Member,
It has come to our attention that when we made our original announcement regarding the potential pending settlement an older draft was sent by mistake. We would like to apologize for any confusion that this may have caused and below is the official announcement that was meant to be sent out instead.
Dear Valued Advanced Mining Member,
First and foremost, we thank each of you for your patience with us over the last several weeks. The feedback that we have received from everyone has not been ignored.
Advanced Mining has positively impacted many lives during its few years in operation. Therefore, it saddens us to inform you that we can no longer service the United States market.
Without over-disclosing, in summary, our team has worked diligently with multiple law firms to ensure that our products and services are not unregistered securities. However, the United States Securities and Exchange Commission (US SEC) and Washington State SEC disagree; therefore, Advanced Mining must take measures to abide by US SEC (and WA SEC) and applicable laws. As a result, we stopped all sales and withdrawals because of a potential pending settlement with the US SEC. During this process, bitcoin mining for clients outside the US may continue normally. After completing our potential pending settlement with the US SEC, we look forward to resuming our global services to clients outside the US and other restricted countries.
Furthermore, we reached a settlement with the Washington State SEC. Therefore, we will first follow the guidelines and procedures outlined in that settlement with Washington State customers. For more information on that settlement, please see the attachment.
In the meantime, we have permission to process all withdrawal requests submitted by June 1, 2022. We will start to process those withdraws by an estimated target date of June 28, 2022. Other withdrawals will resume when Advanced Mining completes all the tasks needed in compliance with the US SEC as part of the potential pending settlement.
In accordance with the potential pending settlement with the US SEC and settlement with the Washington State SEC, US customers may fall under two scenarios:
US customers who earned more than what they originally paid to VBit/Advanced Mining will keep their earnings and must relinquish ownership of their mining hardware.
US customers who have not yet earned more than what they originally paid to VBit/Advanced Mining have two options to choose from:
Keep ownership of their hardware and have it shipped to them at their expense. Advanced Mining will pro-rate and refund any unused pre-paid hosting services.
Relinquish their hardware ownership to receive a full refund of all monies paid minus any commissions and mined bitcoins.
NOTE: Our team will reach out to US customers starting in Washington State to capture their choice. If you fall under scenario #2, please be on the lookout for this.
After completing all tasks to comply with this potential pending settlement, services, and sales to clients outside the US will resume as normal.
We understand that this announcement is unexpected and shocking. However, we ask US members to please refrain from opening support tickets if they fall under the second scenario. Instead, our team will reach out to capture everyone’s choice in a timely and orderly manner.
We ask that everyone please bear with us as we try our best to continue servicing everyone and processing the mass volume of requests we have received. We again would like to thank everyone for their continued support as we overcome this hurdle. We thank you for choosing to mine with Advanced Mining and hope you enjoy the rest of your week.
Sincerely,
Advanced Mining Group
Frequently Asked Questions:
Q: How do I confirm the Washington State SEC Settlement?
A: Because the settlement is finalized, it should be verifiable with Washington State.
Q: Can I get proof of the potential pending settlement with the US SEC?
A: Because this is not finalized and signed off, all discussions between US SEC and our Attorneys are private and confidential.
Q: How do I know that the US SEC potential pending settlement [discussion] is real?
A: If this were not actually happening, it would not be favorable for VBit Mining (DBA Advanced Mining) to make such public claims.
Q: I am a US resident who does not live in Washington State; why am I affected?
A: Because the Settlement with Washing State SEC is finalized, our attorneys have advised the company to proactively act in good faith and apply the same actions to other US members before the potential pending settlement with the US SEC is finalized.
Q: When can I withdraw my bitcoins?
A: For Non-US members, we hope to resume normal operations as soon as possible.
For US members, we will review on a case-by-case basis. However, we are instructed not to allow any new withdrawal of bitcoins deposited through mining or commissions.
Q: Is my mining cloud mining or actual hardware?
A: Many of our senior members have visited and seen the data centers and the miners that occupy the shelves. While referral bonus hash power is from cloud mining and expires after one year, purchased hash power is actual hardware.
Furthermore, let’s not confuse cloud mining with custodial wallet services (versus self-custodial). Advance Mining Wallet is a custodial wallet service. There are false-fact articles that claim Advanced Mining packages are cloud mining because of the custodial wallet services.
Like all custodial services, the actual bitcoins are not in any member’s wallet address.
Please see this third-party source: https://bitpay.com/blog/non-custodial-wallets-vs-custodial-wallets/
Without disclosing how Advanced Mining custodial wallet service works, in general, for security purposes, the majority of bitcoins under our custody are located outside of the system. Our “hot” wallet (or system holding wallet), is filled or refilled with enough bitcoins to fulfill pending withdrawal requests.
This type of design is common among custodial wallet providers.
Q: What is batching?
A: Most custodial wallet services perform some sort of batching. Advanced Mining has engineered its own design for batching.In general, this is a grouping of withdrawal requests into a single batch to either save network fees and/or increase the transfer speed by consolidating all network fees paid by members into a larger sum paid to the blockchain miners.
The “batching” status on each withdrawal indicates that the withdrawal request is currently waiting for the system to add the request to the next batch.
Q: Why was my withdrawal status “batching” for hours/days/etc.
A: We attempted to improve the security of our hot wallet and batching system and introduced bugs where the next outgoing batch was not automatically being created correctly. While our engineers try to identify the solution that does not sacrifice our security enhancements, we are manually batching the withdraws.Due to Washington State Settlement and potential pending US SEC settlement, we are instructed to suspend the withdrawal system.
Q: There was an email sent out stating no new payments will be accepted. Does this apply only to US customers, or to all customers?
A: Sales and orders will operate normally for all international members.
This only applies to US members due to the company proactively acting in good faith of the potential pending settlement with the US SEC.
Best Regards,
Advanced Mining Group
Update: Washington Customers (July 10, 2022)
Customers from Washington have informed me that they have heard nothing from Advanced Mining regarding their refund(s). This is concerning considering the email below from COO, Sean Tu, claimed they would start reaching out to those customers five days ago…
Dear Valued Advanced Mining Members,
Hope everyone had a great weekend.
I would give members some quick updates for this week:
Members with a monthly payment plan can stop making new payments; no new payments will be accepted
All sales are temporarily suspended
Any pending sale will be canceled and refunded
No new commission (and commission bonuses) will be paid to any returned and canceled sales
Commission payout will temporarily be suspended until commissions are re-calculated based on canceled sales, returns, and refunds. Please do not request a new payout from Skywallet; These requests will be lost; there is no way to return them to skywallet
Affiliate Membership for US residents (and US business entities) will be suspended this week (if not already)
We have finalized the WA state list of members; starting today (July 5th), we will begin reaching out to WA members on their options
We are proactively working on a list of refunds for other states
When we are done with WA customers, we will start with other states
Thank you all for your patience!
Sincerely,
Sean Tu, COO
It has also come to my attention that we should file complaints with the CFTC. A customer filed a complaint with another agency and they referred him to the whistleblower program (see image below) to file a complaint. Feel free to copy and paste my complaint above with your information there as well. We need to put as much pressure on them as possible to start making moves.
Update: Washington Order (July 12, 2022)
The Washington Securities attorney confirmed to me today that the Washington Order dates back to October of 2020. I was told that’s when Danh Vo responded to the order saying they were freezing all sales to residents in the state of Washington.
This is exactly what I suspected. I remembered they wouldn’t sell to two states at the time of my purchase in March 2021: Washington and New York. So why are they conveniently resurfacing this order now? Things that make you say hmm.
Update: Mining Wallet Potentially Discovered (July 26, 2022)
I recently made a Reddit post requesting blockchain analysis on the Advanced Mining payout wallet to see if someone could find the mining wallet (the one that receives the BTC). Looks like user u/free_the_worlds was generous enough with his time to do the research. He believes this wallet address to be the mining wallet for Advanced Mining. As of today, the wallet holds 114 BTC (around $2.39M at today’s prices).
