On the 20th, the U.S. Securities and Exchange Commission (SEC) announced it had filed charges against Mining Automatic and its owner, Zan Shaikh. The regulator stated that the two individuals raised approximately $22 million from more than 380 investors through a so-called cryptocurrency mining business, promising steady monthly returns.
Fundraising and Fund Allocation
The SEC alleges that the company operated from June 2023 to May 2025. Investors were told that their funds would be used to purchase computing power to validate blockchain transactions and earn mining rewards.
However, regulators stated that actual mining revenues were insufficient to fulfill the promised returns. According to the SEC, only about 13% of the raised funds were used for mining-related expenses, with the majority going toward marketing, personal expenses, and other unrelated business activities.
Regulatory allegations
The SEC also stated that Shaikh and Mining Automatic made false statements regarding their mining experience, technical capabilities, past performance, and the use of funds. As repayments were delayed, they provided misleading explanations to investors.
According to the complaint, the project failed to return at least $20 million to investors. The SEC alleges that both defendants violated the registration and anti-fraud provisions of the securities laws and requests that the court approve subsequent injunctive relief and penalties.
Follow-up processing
Currently, Shaikh and Mining Automatic have agreed to the court’s ruling but have neither admitted nor denied the associated allegations. If approved by the court, both parties will be permanently prohibited from committing further violations of securities laws.
The SEC also stated that the case was jointly investigated by its Cyber and Emerging Technologies Unit and the Boston Regional Office.