The U.S. Securities and Exchange Commission has filed suit against crypto mining firm Mining Automatic and its owner, Zan Shaikh, alleging they raised more than $22 million from hundreds of investors while directing only a small share of the money to actual mining activity.

The complaint was filed in federal court in Massachusetts and centers on an investment program that, according to the SEC, promised steady monthly crypto-related returns tied to mining operations.

Operation and fundraising

According to the SEC, Shaikh, a Florida resident, operated the business through Bright Vision Distribution LLC from June 2023 through May 2025. Investors were told their money would be used to purchase computing power for validating blockchain transactions and generating recurring crypto rewards.

The agency said the venture attracted more than 380 investors and collected over $22 million during that period. The SEC also warned in the case about operators that promote guaranteed monthly returns tied to crypto mining or similar ventures.

How the money was allegedly used

In the SEC’s account, only about 13% of the funds raised were spent on mining-related costs. The rest, the regulator alleges, was diverted to marketing efforts aimed at bringing in additional investors, Shaikh’s personal spending, and businesses unrelated to the stated mining operation.

The complaint further alleges that Mining Automatic took in at least $20 million more than it paid back to investors, leaving most of the money unaccounted for. The SEC said Shaikh gave misleading explanations for payment delays and made misrepresentations about the condition of the business, as well as his mining experience, technical capabilities, and prior results.

Charges and proposed settlement

The SEC charged Shaikh and Mining Automatic with violating registration and antifraud provisions. Both defendants have agreed to partially settle the case without admitting or denying the allegations, according to the agency.

Any final financial sanctions will be decided by the court. The SEC said potential remedies could include disgorgement, prejudgment interest, and civil penalties. Shaikh could also face a conduct-based injunction and a ban on serving as an officer or director.

Investigation and broader context

The investigation was led by the SEC’s Cyber and Emerging Technologies Unit together with the Boston Regional Office. The case adds to the regulator’s continuing scrutiny of crypto-linked fundraising schemes, particularly those that market predictable returns while offering limited transparency about how investor money is actually used.

The allegations remain claims by the SEC, and the court will determine the final outcome and penalties in the case.

Source: Cryptopolitan