On December 17, 2025, the U.S. Securities and Exchange Commission (SEC) made a significant legal move by officially filing a lawsuit against Bitcoin mining company VBit Technologies and founder Danh Vo. In this lawsuit, the SEC argued that the hosting agreements were essentially a type of investment contract and therefore subject to securities regulation.
Here are the key points in the SEC's stance and its impact on the mining industry:
1. Why is the hosting service considered a "Security"?
The SEC applies the Howey Test (a set of legal standards in the U.S.) to determine whether a transaction is a security. For VBit's services, the SEC argues that:
Expectation of passive income: Investors put money into hosting agreements with the goal of profiting from Bitcoin mining without needing to participate in operations directly.
Dependence on third parties: Investors' profits depend entirely on the management, technical, and operational efforts of the company (VBit), rather than their personal skills.
Limited control: In the VBit lawsuit, the SEC pointed out that customers do not actually own or control the mining machines they have paid for; instead, the company retains full authority to coordinate the Hashrate (mining speed) into the "mining pools" that they control.
2. Specific allegations in the VBit lawsuit:
The lawsuit goes beyond the classification of assets and includes serious fraud allegations:
Misappropriation of funds: The SEC accused Danh Vo of using approximately 48 million USD of investors' money for personal purposes such as gambling, shopping, and gifting to relatives.
Short selling mining machines: The company is accused of selling more storage contracts than the actual number of mining machines they own.
Ponzi-like fundraising: The total amount raised reached over 95 million USD from about 6,400 investors between 2018 and 2022.
3. Impact on the Bitcoin mining industry:
This move by the SEC is causing much controversy:
Subject, Impact, and Reaction:
Hosting services: Facing high legal risks. Companies will need to register with the SEC or adjust their business model to ensure customers have actual control over the hardware.
Individual investors: Better protected against distorted "cloud mining" models, but compliance costs for mainstream services may increase.
Industry stance: Many experts (such as those from Blockware Intelligence) believe that legitimate hosting services (where customers actually own the equipment and only rent space/power) should not be equated with trust investment models.
Important note:
Although the SEC is tightening regulations on third-party hosting services, the agency has also clarified in previous statements (especially under the new administration in 2025) that the act of Bitcoin mining itself (operating machines on a decentralized network) is not considered a securities transaction.
The content is informational and analytical, not investment strategy advice.
