The U.S. SEC has sued crypto mining firm Mining Automatic and its owner Zan Shaikh for allegedly collecting more than $22 million from over 380 investors for the purpose of mining, while spending only a fraction of it on actual crypto mining.

The case, filed in federal court in Massachusetts, is a warning to anyone still buying pitches from crypto operators guaranteeing “monthly returns.”

Shaikh, a Florida resident whose company is registered as Bright Vision Distribution LLC, ran the “mining” operation between June 2023 and May 2025, according to the complaint. He pitched to investors that after they paid cash, Mining Automatic would buy computing power to validate blockchain transactions and they would earn a steady monthly cut in crypto rewards.

Mining Automatic fraud scheme in numbers

The SEC claims the mining never got anywhere close to covering these payments, with only about 13% of the money raised going towards mining-related costs. Most of the remaining funds where used for marketing to bring in new investors, in addition to Shaikh’s personal spending and unrelated businesses, according to the complaint.

According to the SEC, Mining Automatic raked in at least $20 million more than it ever paid back to its investors. When compared to the approximately $22 million raised, that leaves most of the money unaccounted for.

When payments started arriving late, Shaikh gave investors misleading reasons for the delays and misrepresented the state of the business, the SEC alleges. The complaint also says he lied about his mining experience, technical ability, and past results.

SEC lawsuit charges and agreed settlements

The SEC charged Shaikh and Mining Automatic with violating the registration and antifraud provisions of the Securities Act of 1933, plus Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, which bars fraud tied to securities transactions.

Both defendants have already agreed to settle part of the case. They consented to court judgments without admitting or denying the allegations, according to the SEC’s release. Pending a judge’s approval, the orders would permanently bar them from further violations.

Shaikh would also face an officer-and-director ban in addition to a conduct-based injunction. The dollar amounts, disgorgement, prejudgment interest, and civil penalties will be set later by the court after the SEC files a motion.

The agency’s Cyber and Emerging Technologies Unit was in charge of the investigation with its Boston Regional Office.

Crypto enforcement sees busy month

Mining Automatic joins a run of US cases against crypto investment operators. On July 7, the CFTC sued North Carolina’s Trevor Vernon and Argent Capital Management over an alleged $14 million commodity pool fraud involving at least 60 participants.

The Department of Justice moved this month to dismiss its criminal case against the founder of BitClub Network, despite claims the mining scheme cost investors $722 million.

Moving past the U.S., a Taiwanese court sentenced the alleged operator of the BitShine exchange, identified by the surname Shih, to 22 years in prison for illegal digital asset services, fraud, and money laundering.

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