The US Securities and Exchange Commission (SEC) sued crypto mining investment business Mining Automatic and its founder Zan Shaikh, alleging they raised $22 million from more than 380 investors between June 2023 and May 2025 while spending only about 13% of the funds on actual mining operations. The SEC alleged investor money was instead used for marketing, personal expenses, and unrelated ventures, with the operation generating approximately $1.1 million from mining while paying investors roughly $1.8 million in purported returns. The complaint stated Mining Automatic was operated by Massachusetts-based Bright Vision Distribution LLC and that the company promised guaranteed monthly returns from crypto asset mining despite operating a business that could not generate the advertised payouts.
Mining Automatic Spent $7 Million on Advertising While Misallocating Investor Funds
According to the SEC complaint, Mining Automatic spent about $7 million on advertising to attract new investors. The SEC alleged the shortfall between mining revenue and investor payouts meant some payments were funded with money from other investors, giving the scheme "some of the hallmarks of a Ponzi scheme." Shaikh allegedly used investor funds for real estate, vehicles, entertainment, and transfers to his personal bank accounts. Mining Automatic stopped paying investors by March 2025, and the SEC said none had recovered their original investment. More than $20 million in principal remains unpaid, according to the complaint.
![SEC complaint against Mining Automatic]()
SEC complaint against Mining Automatic. Source: SEC
SEC Seeks Disgorgement and Permanent Injunctions Against Shaikh
The SEC is seeking disgorgement, civil penalties, and permanent injunctions in the case. The agency also requested orders barring Shaikh from selling securities or serving as an officer or director of a public company.
SEC Published 2026-2030 Strategic Plan Prioritizing Digital Assets
The lawsuit comes as the SEC has increasingly emphasized developing clearer rules for digital assets under Chair Paul Atkins. In June, the agency published its 2026-2030 Strategic Plan, identifying blockchain technology, tokenization, and crypto market infrastructure as long-term priorities while reaffirming its investor protection mandate. The SEC expanded on that approach in July with its 2026 rulemaking agenda, proposing new rules for crypto broker-dealers, digital assets traded on national securities exchanges and alternative trading systems, and potential exemptions and safe harbors for certain digital asset offerings. The regulatory push coincides with congressional efforts to reshape US crypto oversight through the Digital Asset Market Clarity Act, which would clarify the respective roles of the SEC and Commodity Futures Trading Commission (CFTC), if enacted. The bill is expected to face a key Senate vote before lawmakers begin their August recess.
FAQ
What did the SEC allege Mining Automatic did with investor funds?
The SEC alleged Mining Automatic raised $22 million from more than 380 investors between June 2023 and May 2025 while spending only about 13% on mining operations. The complaint stated investor money was used for marketing, personal expenses, and unrelated ventures, with approximately $7 million spent on advertising and funds diverted to Shaikh's personal use for real estate, vehicles, and entertainment.
How much did Mining Automatic generate from actual crypto mining?
According to the SEC complaint, Mining Automatic generated approximately $1.1 million from mining operations while paying investors roughly $1.8 million in purported returns. The SEC alleged this shortfall meant some payments were funded with money from other investors, giving the scheme "some of the hallmarks of a Ponzi scheme."
