The Securities and Exchange Commission (SEC) has filed a lawsuit against Mining Automatic and its owner, Zan Shaikh, accusing them of defrauding over 380 investors out of approximately $22 million through a fake crypto mining scheme.
Summary
- The SEC alleges Mining Automatic raised $22 million from more than 380 investors.
- Only 13% of investor funds reportedly covered costs linked to crypto mining.
- Zan Shaikh allegedly used investor money for marketing and unrelated personal expenses.
On July 20th, the Securities and Exchange Commission (SEC) announced charges against a Florida resident and his company, Bright Vision Distribution LLC. They allege the individual misused investor funds by promising fixed monthly returns.
A lawsuit was filed in federal court in Massachusetts alleging that from June 2023 to May 2025, Shaikh falsely promoted Mining Automatic as a successful cryptocurrency mining company that consistently earned money for investors.
Investors were promised their money would pay for the computer power needed to confirm transactions on cryptocurrency networks. This process, called mining, earns rewards in crypto, and Mining Automatic led investors to believe this revenue would cover their monthly payments.
However, the SEC claims the mining operation didn’t generate enough revenue to fulfill its promises to investors. When payments were late, Shaikh and Mining Automatic reportedly provided false or misleading reasons for the delays and misrepresented the company’s financial health.
Investor money funded marketing and personal expenses
My research into this case, based on the SEC’s findings, reveals that only around 13% of the funds actually went towards the mining operation they advertised. The vast majority – a concerning amount – appears to have been used for marketing to bring in new investors, as well as covering personal expenses for those involved and funding completely separate business ventures.
As an analyst reviewing this case, I’ve found that the regulator alleges the defendants weren’t truthful about several key aspects of their operation. Specifically, they reportedly misrepresented their experience in mining, their technical capabilities, and the outcomes of prior projects. Beyond that, concerns were raised regarding how investors’ money was actually being spent and whether the mining equipment was functioning as claimed.
The company, Mining Automatic, took in at least $20 million more from investors than it paid back out. Agency calculations show that around $22 million was raised overall, but most of that money – about $22 million – hasn’t been returned to investors and its whereabouts are currently unknown.
The SEC accused Shaikh and Mining Automatic of breaking laws related to registering securities and preventing fraud, specifically those outlined in the Securities Act of 1933. They also claim violations of the Securities Exchange Act of 1934 and Rule 10b-5, which are designed to stop fraudulent activity involving the buying and selling of investments.
Shaikh and Mining Automatic have agreed to court rulings without confirming or denying the accusations against them. If approved by the court, these rulings would permanently prevent them from violating securities laws in the future.
As part of the agreement, Shaikh would be prohibited from serving as an officer or director of any company and would be subject to a court order regarding future conduct. The amount of money Shaikh must give up, any interest owed, and civil penalties will be determined later by a judge, after the SEC requests a decision.
The Securities and Exchange Commission investigated the case with its Cyber and Emerging Technologies Unit and staff from its Boston office. Joy Guo, Sejal Bhakta, Amy Gwiazda, Mark Albers, and Kathleen Shields led the investigation, overseen by Laura D’Allaird. Shields will be responsible for prosecuting the case.
U.S. agencies pursue other alleged crypto investment frauds
Mining Automatic is the newest cryptocurrency investment firm to be targeted in a U.S. legal action. Just this July, the Commodity Futures Trading Commission filed a lawsuit against Trevor Vernon of North Carolina and Argent Capital Management LLC, accusing them of a $14 million fraud involving a commodity pool.
The CFTC announced on July 7th that Vernon and Argent Capital collected funds from at least 60 investors between March 2022 and February 2026. They then used those funds to trade financial instruments like equity index futures and options, as well as cryptocurrencies including Bitcoin and Ether.
The CFTC claims Vernon misled investors by portraying himself as a profitable trader and falsely stating the investment pool was performing well. The lawsuit centers on his statements made while seeking investments and how he managed the money he received.
As a crypto investor, I’ve been following some interesting legal cases lately. Just this month, Crypto.news reported something pretty surprising: the Department of Justice is dropping its criminal case against the founder of BitClub Network. That’s despite claims that the project scammed investors out of a huge $722 million through their crypto mining operation. It just shows how complicated these cases can be and that outcomes aren’t always what you expect.
A Taiwanese court recently sentenced the alleged leader of the BitShine cryptocurrency exchange to 22 years in prison. According to Taiwan’s Central News Agency, the defendant, identified only as Shih, was found guilty of operating an illegal cryptocurrency business, committing fraud, and laundering money.
As I’ve reviewed the court documents, it’s clear this group exploited the legitimacy of BitShine – a registered cryptocurrency business – as a cover for illegal operations. Prosecutors have presented evidence suggesting they collaborated with fraud rings and individuals connected to Thento Union, a significant Taiwanese organized crime syndicate.
Between January 2024 and April 2025, investigators believe over $71 million was moved illegally, including by turning money taken from victims into the cryptocurrency Tether (USDT) and sending it abroad. According to CNA, prosecutors have identified 1,539 victims who lost a total of more than $39 million.
2026-07-20 20:02