The US SEC sues Mining Automatic for a crypto mining investment scam; 380 investors lost more than $22 million

PANews July 21, 2024: The U.S. Securities and Exchange Commission (SEC) announced that it has filed a lawsuit against Florida resident Zan Shaikh and his company, Bright Vision Distribution LLC (operating under the name Mining Automatic). The SEC alleges they defrauded investors through a purported false cryptocurrency mining investment scheme, with approximately $22 million raised.

The SEC said that from June 2023 to May 2025, Shaikh and Mining Automatic promised investors fixed monthly returns by participating in a cryptocurrency mining business, but the mining operations in question were actually unable to generate the promised returns.

According to the SEC’s complaint, Shaikh and Mining Automatic allegedly made false statements regarding their own cryptocurrency mining experience, operational capabilities, the intended use of investment funds, and the status of the mining business. They also justified delayed payments on the grounds that they could not pay investors’ returns.

The SEC stated that although the defendants claimed that investors’ funds would be used for cryptocurrency mining, in reality only about 13% of the investment funds were used for so-called mining-related expenses. The rest of the funds were mainly used for marketing to attract new investors, as well as to pay Shaikh personally and for other unrelated business expenses.

The regulator said that Mining Automatic raised approximately $22 million in total from more than 380 investors, but the amount actually repaid was at least less than $20 million of the funds raised.

The SEC has filed the lawsuit in the U.S. District Court for the District of Massachusetts, alleging that Shaikh and Mining Automatic violated the anti-fraud provisions and rules on unregistered securities offerings under the Securities Act of 1933 and the Securities Exchange Act of 1934.

Both parties have agreed to a settlement judgment approved by the court, including a permanent ban on future violations of relevant securities regulations, and an executive and director officer employment prohibition against Shaikh. The SEC will also seek disgorgement of alleged unlawful proceeds, pre-judgment interest, and civil penalties, with the specific amounts to be determined later by the court.

The SEC said the case was investigated jointly by its Enforcement Division’s Cyber Unit and Emerging Technology group, along with the Boston office, further reflecting the regulator’s ongoing strengthening of scrutiny of cryptocurrency investment projects and mining-related financing activities.