SEC Files Lawsuit Over Alleged $22M Crypto Mining Fraud Scheme

The SEC alleges that Mining Automatic and its founder raised $22 million from investors by promising guaranteed returns from crypto mining, while only a small portion of those funds was actually used for mining operations.

The US Securities and Exchange Commission (SEC) has filed a lawsuit against crypto mining investment firm Mining Automatic and its founder, Zan Shaikh, alleging they raised $22 million from investors while allocating only about 13% of the funds to actual mining operations.

According to the SEC, Mining Automatic was operated by Massachusetts-based Bright Vision Distribution LLC, which raised funds from more than 380 investors between June 2023 and May 2025.

The company allegedly promised guaranteed monthly returns from crypto mining even though its business was incapable of producing the advertised payouts. According to the SEC, investor funds were instead spent on marketing, personal expenses, and unrelated business ventures.

According to the complaint, the operation generated approximately $1.1 million from crypto mining while distributing about $1.8 million in purported returns to investors. The SEC alleged the funding gap meant that some payouts were made using money from newer investors, giving the operation “some of the hallmarks of a Ponzi scheme.”

Mining Automatic also allegedly spent around $7 million on advertising campaigns to attract new investors, while Shaikh reportedly used investor funds to purchase real estate, vehicles, entertainment, and make transfers to his personal bank accounts.

Mining Automatic stopped making payments to investors by March 2025, and the SEC said none of them had recovered their original investments. According to the complaint, more than $20 million in investor principal remains unpaid.

The SEC is seeking disgorgement, civil penalties, and permanent injunctions, along with court orders that would bar Shaikh from selling securities or serving as an officer or director of a public company.

SEC Prioritizes Crypto Rulemaking Over Enforcement#

The lawsuit comes as the SEC places greater emphasis on establishing clearer regulations for digital assets under Chair Paul Atkins. In June, the agency released its 2026–2030 Strategic Plan, highlighting blockchain technology, tokenization, and crypto market infrastructure as long-term priorities while reaffirming its commitment to investor protection.

The SEC built on that approach in July by releasing its 2026 rulemaking agenda, which proposed new regulations for crypto broker-dealers, digital assets traded on national securities exchanges and alternative trading systems, as well as potential exemptions and safe harbors for certain digital asset offerings.

The regulatory effort comes as Congress continues to advance the Digital Asset Market Clarity Act, legislation that would define the respective responsibilities of the SEC and the Commodity Futures Trading Commission (CFTC) if enacted. The bill is expected to face a key Senate vote before lawmakers begin their August recess.