Key facts
- The SEC alleges Mining Automatic and founder Zan Shaikh defrauded over 380 investors out of $22 million.
- The company promised guaranteed crypto mining returns but spent most funds on marketing and personal expenses.
- Only about 13% of investor funds were used for mining operations.
- The scheme allegedly used money from new investors to pay purported returns to earlier investors.
- The SEC is seeking financial penalties and injunctions against Shaikh.
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 a scheme that defrauded over 380 investors out of approximately $22 million. The SEC claims that between June 2023 and May 2025, Mining Automatic, operated by Bright Vision Distribution LLC, promised investors guaranteed monthly returns from cryptocurrency mining operations. However, the agency alleges that only a fraction of the raised funds, about 13%, was actually used for mining. Instead, investor money was allegedly diverted to marketing, personal expenses, and unrelated ventures. The complaint states that Mining Automatic generated about $1.1 million from mining activities while paying investors approximately $1.8 million in purported returns. The shortfall suggests that some payments to investors were funded by money from other investors, bearing hallmarks of a Ponzi scheme. The company reportedly spent around $7 million on advertising to attract new investors, and Shaikh allegedly used investor funds for personal expenditures including real estate and vehicles. Mining Automatic ceased payments to investors by March 2025, leaving more than $20 million in principal unpaid. The SEC is seeking disgorgement, civil penalties, and permanent injunctions against Shaikh, aiming to bar him from selling securities or serving as an officer or director of a public company. This action occurs as the SEC is focusing on developing clearer rules for digital assets and has proposed new regulations for crypto broker-dealers and trading platforms.