SEC sues Mining Automatic and founder over $22M crypto scheme

The U.S. Securities and Exchange Commission filed suit against crypto mining investment firm Mining Automatic and its founder, Zan Shaikh, alleging the defendants raised $22 million from more than 380 investors and spent only about 13% on actual mining operations.

The complaint says Mining Automatic was operated by Massachusetts-based Bright Vision Distribution LLC and solicited funds from June 2023 through May 2025 with promises of guaranteed monthly returns from crypto asset mining. The SEC alleges the business could not generate the advertised payouts and that investor money was redirected to marketing, personal expenses and unrelated ventures instead of mining equipment and operations.

The SEC reports Mining Automatic generated about $1.1 million in mining revenue while paying investors roughly $1.8 million in purported returns. The complaint states some payments were covered with funds from later investors and describes the payments as having “some of the hallmarks of a Ponzi scheme.” The filing alleges the company spent about $7 million on advertising to recruit new investors and that Shaikh used investor funds to buy real estate, vehicles and entertainment, and to make transfers into personal bank accounts.

According to the complaint, payments to investors stopped by March 2025. The SEC says none of the investors had recovered their original principal when the suit was filed and that more than $20 million in investor principal remains unpaid.

The agency is seeking disgorgement of alleged ill-gotten gains, civil penalties, permanent injunctions and orders that would bar Shaikh from selling securities or serving as an officer or director of a public company. The allegations in the complaint have not been adjudicated.

The lawsuit comes as the SEC has outlined long-term priorities for digital assets in its 2026–2030 Strategic Plan and included crypto-related rulemaking in its 2026 agenda. The rulemaking proposals cover crypto broker-dealers, digital assets traded on national securities exchanges and alternative trading systems, and possible exemptions or safe harbors for certain digital asset offerings.

Congressional action may affect oversight. The Digital Asset Market Clarity Act, which would clarify the respective roles of the SEC and the Commodity Futures Trading Commission, is expected to face a key Senate vote before lawmakers begin their August recess.