SEC targets Mining Automatic over alleged $22M crypto mining fraud

cryptonews

Jul 21

The U.S. Securities and Exchange Commission has sued Mining Automatic and its owner, Zan Shaikh, after they allegedly raised about $22 million from more than 380 investors through a fraudulent crypto ...

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Much of the remaining capital was allegedly spent on marketing campaigns designed to attract more investors, along with Shaikh’s personal costs and expenses tied to unrelated busine","collect":0,"end_time":0,"defaultTopTitle":"crypto.news","property":[],"viewcount":null,"language":"en","relate_stocks":{"BKCH":"AdvisorShares Sabretooth ETF","BK4588":"碎股","IBLC":"iShares Blockchain and Tech ETF","STCE":"Schwab Crypto Thematic ETF","BITQ":"Bitwise Crypto Industry Innovators ETF","BK4585":"ETF&股票定投概念","BITW":"Bitwise 10 Crypto Index ETF","GDLC":"Grayscale CoinDesk Crypto 5 ETF","TEKX":"SPDR Galaxy Transformative Tech Accelerators ETF","DAPP":"VanEck Digital Transformation ETF","CRPT":"First Trust SkyBridge Crypto Industry and Digital Economy ETF","GUNR":"全球上游自然资源ETF-FlexShares","LFGY":"YieldMax Crypto Industry and Tech Portfolio Option Income ETF","SATO":"Invesco Alerian Galaxy Crypto Economy ETF","NCIQ":"HASHDEX NASDAQ CRYPTO INDEX US ETF","DIME":"CoinShares Altcoins ETF"},"translate_title":"SEC 针对 Mining Automatic 涉嫌 2200 万美元加密货币挖矿欺诈","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DIME":1.5,"DAPP":1.5,"STCE":1.5,"GUNR":1.5,"CRPT":1.5,"TEKX":1.5,"LFGY":1.5,"BITW":1.5,"BITQ":1.5,"SATO":1.5,"GDLC":1.5,"NCIQ":1.5,"BKCH":1.5,"IBLC":1.5},"content_text":"The U.S. Securities and Exchange Commission has sued Mining Automatic and its owner, Zan Shaikh, after they allegedly raised about $22 million from more than 380 investors through a fraudulent crypto mining operation.\n\n\nSummary\n\n\n\nThe SEC alleges Mining Automatic raised $22 million from more than 380 investors.\nOnly 13% of investor funds reportedly covered costs linked to crypto mining.\nZan Shaikh allegedly used investor money for marketing and unrelated personal expenses.\n\n\n\nThe SEC announced the partially settled charges on July 20, accusing the Florida resident and his company, legally registered as Bright Vision Distribution LLC, of misusing investor money while promoting guaranteed monthly returns.\nFiled in the U.S. District Court for the District of Massachusetts, the complaint covers conduct between June 2023 and May 2025. According to the regulator, Shaikh presented Mining Automatic as an experienced crypto mining business capable of generating steady income for its customers.\nInvestors were allegedly told their money would fund computing resources used to validate transactions on crypto networks. In return for providing this processing power, miners can receive crypto assets as rewards, creating the revenue that Mining Automatic claimed would support monthly payments.\nYet the SEC alleges the operation could not produce enough mining income to meet those promises. When payments became overdue, Shaikh and Mining Automatic allegedly gave investors misleading explanations about the cause of the delays and the condition of the business.\nInvestor money funded marketing and personal expenses\nOnly about 13% of the money raised went toward costs linked to the claimed mining operation, according to the SEC’s complaint. Much of the remaining capital was allegedly spent on marketing campaigns designed to attract more investors, along with Shaikh’s personal costs and expenses tied to unrelated businesses.\nThe regulator also accused the defendants of making false claims about their mining experience, technical knowledge and previous results. Other alleged misrepresentations covered how investor funds would be used and whether the mining infrastructure was operating as described.\nBased on the complaint, Mining Automatic received at least $20 million more from investors than it returned to them. The figure leaves most of the roughly $22 million raised unaccounted for through investor repayments, according to the agency’s calculations.\nSEC officials charged Shaikh and Mining Automatic with violating the registration and antifraud provisions of the Securities Act of 1933. The complaint also alleges breaches of the Securities Exchange Act of 1934 and Rule 10b-5, which prohibit fraud in connection with securities transactions.\nShaikh and Mining Automatic have consented to court judgments without the SEC’s release stating that they admitted or denied the allegations. Subject to judicial approval, the proposed orders would permanently bar both defendants from committing the cited securities-law violations.\nUnder the proposed settlement, Shaikh would also receive an officer-and-director ban and a conduct-based injunction. Disgorgement, prejudgment interest and civil penalties will be decided later by the court following a motion from the SEC.\nThe agency’s Cyber and Emerging Technologies Unit investigated the case alongside staff from its Boston Regional Office. SEC officials Joy Guo, Sejal Bhakta, Amy Gwiazda, Mark Albers and Kathleen Shields conducted the investigation under the supervision of Laura D’Allaird, while Shields will lead the litigation.\nU.S. agencies pursue other alleged crypto investment frauds\nMining Automatic is the latest crypto investment operation to face a U.S. civil enforcement case. Earlier in July, the Commodity Futures Trading Commission sued North Carolina resident Trevor Vernon and Argent Capital Management LLC over an alleged $14 million commodity pool fraud.\nAccording to the CFTC’s July 7 announcement, Vernon and Argent Capital raised money from at least 60 participants between March 2022 and February 2026. The pool traded equity-index futures, options on those futures, Bitcoin, Ether and other crypto assets.\nThe CFTC alleged that Vernon presented himself as a successful trader and told potential participants that the investment pool had recorded strong gains. Its lawsuit focuses on claims made while soliciting investors and the handling of the funds collected from them.\nCrypto mining schemes have produced different outcomes in recent U.S. cases. Crypto.news reported this month that the Department of Justice had moved to dismiss its criminal case against the founder of BitClub Network, despite allegations that the mining operation defrauded investors of $722 million.\nOutside the U.S., Taiwan’s Shilin District Court recently sentenced the alleged mastermind of the BitShine crypto exchange to 22 years in prison. Taiwan’s semi-official Central News Agency identified the defendant by the surname Shih and reported that the court convicted him of running illegal virtual asset services, fraud and money laundering.\nCourt findings cited by CNA showed that the group used BitShine’s appearance as a registered crypto business to conceal criminal activity. Prosecutors alleged that the operation worked with fraud syndicates and people linked to the Thento Union, a major organized crime group in Taiwan.\nInvestigators estimated that more than $71 million was laundered between January 2024 and April 2025, partly by converting victims’ cash into Tether’s USDT before sending it overseas. CNA reported that prosecutors identified 1,539 victims whose combined losses exceeded $39 million.\n\n\n\n\n\n                Read more:\n            \n\n                Zilliqa halts ZIL transfers after exchange cold wallet theft","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":false,"editions":null,"column":"","sentiment":"-1","news_tag":"policyRegulatory","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"}}}