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SEC sues Mining Automatic and founder over alleged $22M crypto mining scheme
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- DeepHorus
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against crypto mining investment firm Mining Automatic and its founder, Zan Shaikh, alleging they raised approximately $22 million from investors through fraudulent promises. According to the complaint filed in federal court, the scheme operated from June 2023 to May 2025, targeting over 380 investors with guarantees of consistent monthly returns from cryptocurrency mining operations. The SEC claims that the company spent only about 13% of the raised funds on actual mining activities, instead diverting money to marketing, personal expenses, and unrelated ventures.
Mining Automatic was operated by Bright Vision Distribution LLC, a Massachusetts-based entity controlled by Shaikh. The company allegedly marketed itself as a profitable crypto mining enterprise, assuring investors of steady payouts despite lacking the operational capacity to generate such returns. The SEC’s investigation revealed that Mining Automatic generated only about $1.1 million from mining activities during the two-year period, yet paid out roughly $1.8 million in purported returns to investors. This shortfall, according to the regulator, forced the company to use new investor funds to cover existing obligations, exhibiting hallmarks of a Ponzi scheme.
The complaint details significant misappropriation of investor funds, including approximately $7 million spent on advertising to attract additional victims. Shaikh allegedly used investor money for personal expenses such as real estate purchases, vehicles, entertainment, and transfers to his personal bank accounts. By March 2025, Mining Automatic ceased all payments to investors, leaving over $20 million in principal unpaid. The SEC stated that none of the investors have recovered their original investments.
The SEC is seeking disgorgement of ill-gotten gains, civil penalties, and permanent injunctions against Mining Automatic and Shaikh. Additionally, the regulator aims to bar Shaikh from participating in any future securities offerings or serving as an officer or director of a public company. This lawsuit underscores the agency’s intensified scrutiny of crypto-related investment schemes that mislead retail investors.
The case emerges amid a broader regulatory shift under SEC Chair Paul Atkins, who has prioritized developing clear rules for digital assets. In June, the SEC published its 2026–2030 Strategic Plan, identifying blockchain technology, tokenization, and crypto market infrastructure as long-term priorities while reaffirming investor protection. The following month, the agency proposed new rules for crypto broker-dealers and digital asset trading platforms, along with potential exemptions for certain offerings.
Congressional efforts to clarify crypto oversight are also advancing, with the Digital Asset Market Clarity Act aiming to delineate the roles of the SEC and Commodity Futures Trading Commission. The bill is expected to face a key Senate vote before the August recess. As regulatory frameworks evolve, cases like this highlight the persistent risks in unregulated crypto investment products and the need for robust enforcement actions to safeguard investors.
