SEC Sues Crypto Mining Firm Mining Automatic Over Alleged $22 Million Ponzi Scheme

The US Securities and Exchange Commission has filed a lawsuit against a cryptocurrency mining investment venture and its founder, accusing them of orchestrating a $22 million fraudulent scheme that targeted hundreds of investors.

According to the federal complaint, Massachusetts-based Bright Vision Distribution LLC, operating under the name Mining Automatic, and its founder, Zan Shaikh, raised millions of dollars from more than 380 investors between June 2023 and May 2025. The regulator alleges that despite promising guaranteed monthly returns from cryptocurrency mining operations, the business spent only about 13% of the pooled funds on actual mining activities.

Instead of building the robust mining infrastructure promised to backers, the SEC claims the defendants diverted the vast majority of the capital toward aggressive marketing campaigns, unrelated business ventures, and Shaikh’s personal luxury expenses, including real estate, high-end vehicles, and entertainment.

The financial mechanics of the operation, as detailed by regulators, closely mirror a classic Ponzi scheme. While the firm’s actual mining operations generated a modest $1.1 million, Mining Automatic distributed approximately $1.8 million in purported returns to its investors. The SEC alleges that this structural deficit was covered by using capital from newer investors to pay off older ones.

To keep the operation afloat and attract fresh capital, the company reportedly allocated roughly $7 million of investor funds to advertising. Despite these promotional efforts, the business model proved unsustainable. Mining Automatic halted all payouts to investors by March 2025. The SEC reports that none of the participants have recovered their initial principal, leaving more than $20 million in investor funds completely unpaid.

In its legal filing, the SEC is seeking permanent injunctions against both Shaikh and his company, civil penalties, and the disgorgement of ill-gotten gains. Additionally, the regulator is asking the court to bar Shaikh from selling securities or serving as an officer or director of any publicly traded company.

This high-profile enforcement action comes at a transitional moment for digital asset regulation in the United States. Under the leadership of Chair Paul Atkins, the SEC has begun shifting its approach toward establishing a more structured rulemaking framework for the broader digital asset sector.

In June, the agency released its 2026–2030 Strategic Plan, which highlights blockchain technology, asset tokenization, and crypto market infrastructure as key areas of long-term focus, while maintaining its core mission of investor protection. This strategic shift was further outlined in July when the SEC introduced a rulemaking agenda proposing new guidelines for digital asset broker-dealers, alternative trading platforms, and potential regulatory exemptions for specific digital asset offerings.

At the same time, federal lawmakers are working to clarify the boundaries of cryptocurrency oversight. Congress is currently considering the Digital Asset Market Clarity Act, a legislative proposal designed to clearly delineate regulatory responsibilities between the SEC and the Commodity Futures Trading Commission. The bill is expected to face a crucial Senate vote before the upcoming legislative recess.