- The SEC sued Mining Automatic and founder Zan Shaikh over an alleged $22 million crypto mining investment scheme.
- The complaint says only about 13% of the money raised was spent on mining operations.
- More than $20 million in investor principal remains unpaid, according to the SEC.
The US Securities and Exchange Commission has sued Mining Automatic and its founder, Zan Shaikh, alleging that the crypto mining investment business raised $22 million while directing only a small share of investor money toward actual mining operations. According to the complaint, the company was operated through Massachusetts-based Bright Vision Distribution LLC and collected funds from more than 380 investors between June 2023 and May 2025. The SEC says investors were promised guaranteed monthly returns linked to crypto asset mining, even though the business allegedly lacked the operating revenue needed to support those payments. The agency also claims that investor funds were diverted to marketing, personal expenses and unrelated business ventures.
Mining Automatic lawsuit allegations
According to the SEC, Mining Automatic operated through Bright Vision Distribution LLC and raised approximately $22 million from more than 380 investors over a period of nearly two years. The complaint covers activity between June 2023 and May 2025 and focuses on the way the company marketed its crypto mining investment program to potential participants. The agency says investors were told that their money would finance mining operations capable of producing guaranteed monthly returns. However, the complaint alleges that the company’s actual mining performance was not sufficient to generate the payouts it advertised. The SEC therefore argues that investors received misleading information about both the profitability and financial condition of the business.
How Mining Automatic allegedly used investor funds
The complaint says that only about 13% of the $22 million raised by Mining Automatic was spent on mining operations. According to the SEC, most of the remaining investor money was directed toward other purposes, including promotional activity, personal spending and ventures unrelated to the crypto mining business described to investors. The agency alleges that approximately $7 million was spent on advertising intended to attract additional investors to the program. It also claims that Shaikh used investor funds to pay for real estate, vehicles, entertainment expenses and transfers into his personal bank accounts. These expenditures form an important part of the SEC’s allegations concerning the misuse of investor capital.
Mining Automatic returns and unpaid principal
The SEC says the company generated approximately $1.1 million through mining activity while paying investors around $1.8 million in purported returns. That difference is central to the lawsuit because it suggests that the mining operation itself was not generating enough revenue to finance the payments that investors had been promised. According to the complaint, some investor payouts may therefore have been funded with money collected from other participants, giving the operation characteristics associated with a Ponzi scheme. The SEC also says Mining Automatic stopped making payments by March 2025, that investors had not recovered their original investments and that more than $20 million in principal remained unpaid.
SEC remedies sought in the lawsuit
Through the lawsuit, the SEC is seeking disgorgement of allegedly unlawful gains, civil financial penalties and permanent injunctions against the defendants. The agency is also requesting orders that would prevent Shaikh from offering or selling securities and from serving as an officer or director of a publicly traded company. The requested remedies are intended to address both the alleged financial misconduct and the risk of similar activity occurring again. The SEC will still need to prove its allegations through the legal process, and the complaint represents the agency’s account of the conduct rather than a final court judgment against Mining Automatic or its founder.
Conclusion
The SEC’s complaint against Mining Automatic alleges that the company raised $22 million by promising crypto mining returns that its operations could not realistically support. According to the agency, only about 13% of investor funds went toward mining, while substantial amounts were spent on advertising, personal purchases and unrelated ventures. More than 380 investors allegedly participated in the program, payments stopped by March 2025 and over $20 million in principal remains unpaid. The SEC is now seeking financial penalties, repayment of allegedly unlawful gains and restrictions that could prevent Zan Shaikh from participating in future securities offerings or holding leadership positions at public companies.
Disclaimer
The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from CryptoNewsBytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from any company.
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