VBit Technologies, the South Philadelphia-based cryptocurrency mining company accused in mounting lawsuits of running a Ponzi scheme, is facing a crackdown from regulators in Montana, where it operated a data center.

The company, which was headquartered on Washington Avenue until it shuttered its doors last year, was accused of defrauding thousands of investors who were unable to access over $11 million worth of Bitcoin stored across their digital accounts.

VBit’s executives, who claimed the company was sold to a Chinese firm despite no public record of the sale, face six lawsuits in Pennsylvania and Delaware federal courts alleging securities fraud and other offenses.

Though many of the company’s 15,000-plus customers were located in the Philadelphia region, VBit’s warehouse in Columbia Falls, Mont., housed the expensive, energy-consuming mining computers they were leasing.


Customers were told the devices, which process Bitcoin transactions, would generate a flow of new Bitcoin that was regularly deposited into digital accounts until around the time of cryptocurrency’s global crash in value in May.

A consumer complaint got the attention of Montana State Auditor Troy Downing, whose office is demanding the embattled company register to sell securities in the state and identify itself as a multilevel marketer within 15 days.

Should VBit not comply with the administrative order, Downing’s office said the company would be considered guilty by default and ordered to pay a $15,000 fine and restitution to its investors in the state.

“A lot of folks just don’t understand what they’re investing in,” Downing said Friday. The regulator said his office knew at least two victims in the state, a married couple who invested $24,000, though he anticipates more will come forward.

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