SEC settlement exposes $22m crypto mining scheme where 13% reached operations
US regulator secures partial settlement against Mining Automatic and its owner after alleging most investor funds never financed any mining activity.
The US Securities and Exchange Commission has filed partially settled fraud charges against a Florida-based crypto mining venture and its owner, alleging that only a fraction of the roughly $22 million raised from investors ever reached the mining operations it claimed to run. The case, brought against Mining Automatic and Zan Shaikh, adds to a growing docket of enforcement actions targeting yield-promising crypto schemes that regulators say function closer to unregistered securities offerings than genuine industrial mining ventures.
Complaint alleges most of the money never went near a mining rig
The complaint, filed in the US District Court for the District of Massachusetts and covering conduct between June 2023 and May 2025, accuses Shaikh and his company — legally registered as Bright Vision Distribution LLC — of raising the sum from more than 380 investors while promising guaranteed monthly returns generated by crypto mining infrastructure. According to the SEC, investors were told their capital would fund the computing power needed to validate transactions on blockchain networks, with mining rewards used to cover the promised payouts.
The regulator’s calculations, cited by both crypto.news and coincu.com, put the share of investor money actually spent on mining-related costs at roughly 13%. The remainder, the SEC alleges, was diverted largely into marketing campaigns aimed at recruiting further investors, alongside Shaikh’s personal expenses and costs tied to other, unrelated businesses. Mining Automatic is said to have paid back at least $20 million less than it collected, leaving the bulk of the $22 million unaccounted for through investor repayments.
Charges span registration and antifraud statutes
The SEC’s complaint cites violations of the registration and antifraud provisions of the Securities Act of 1933, as well as breaches of the Securities Exchange Act of 1934 and Rule 10b-5, the core antifraud rule governing securities transactions in the United States. When payments to investors fell overdue, the agency alleges, Shaikh and Mining Automatic offered misleading explanations for the delays rather than disclosing the true state of the business.
Shaikh and Mining Automatic have consented to proposed court judgments without admitting or denying the SEC’s findings, a common structure in partially settled enforcement actions. Subject to judicial approval, the orders would permanently bar both defendants from further violations of the cited securities laws, impose an officer-and-director ban on Shaikh, and require disgorgement plus prejudgment interest, with the precise financial penalties still to be determined by the court.
Another entry in the mining-yield enforcement pattern
The case is the latest in a run of US actions against schemes marketed as passive-income crypto mining products, an area regulators have flagged repeatedly for opaque custody arrangements and returns that bear little relation to actual mining economics — which fluctuate with network difficulty, energy costs and coin prices rather than delivering fixed monthly payouts. For UK and European investors increasingly exposed to cross-border mining and staking products marketed on social platforms, the case underscores why regulators on both sides of the Atlantic continue to scrutinise the gap between what such schemes promise and what their underlying infrastructure can actually verify.
The SEC’s action does not name any registered exchange or platform beyond Mining Automatic itself, and the settlement remains subject to court approval before penalties are finalised.
