Details of the Alleged Scheme

The Securities and Exchange Commission filed a complaint in the U.S. District Court for the District of Massachusetts alleging that Zan Shaikh, a Florida resident, and Mining Automatic, operated through Bright Vision Distribution LLC, conducted the scheme between June 2023 and May 2025.

According to the SEC, investors were told their funds would support computing resources for validating transactions on crypto networks, generating rewards to deliver consistent monthly payments. The regulator claims the operation fell far short of those promises, with only about 13% of raised capital, roughly $1.1 million, allocated to actual mining-related expenses.

Mining activities reportedly generated around $1.1 million in revenue, while approximately $1.8 million was paid out to investors. The SEC noted that this gap resulted in some payments being funded by new investor contributions, exhibiting characteristics similar to a Ponzi scheme.

Misuse of Funds and Misrepresentations

The complaint states that a substantial portion of the funds, including around $7 million, supported advertising efforts to attract additional investors. Shaikh allegedly directed other money toward personal expenses such as real estate, vehicles, entertainment, and transfers to personal accounts, as well as costs for unrelated ventures.

Regulators further allege that Shaikh and the company made false claims about their mining experience, technical expertise, previous results, the use of investor funds, and the operational status of the mining infrastructure. When payments fell behind, investors reportedly received misleading explanations about the delays and the business's condition.

Payments to investors ceased by March 2025, with the SEC asserting that none recovered their original principal. More than $20 million in investor principal remains unpaid.

Charges and Settlement Terms

The SEC charged Shaikh and Mining Automatic with violating the registration and antifraud provisions of the Securities Act of 1933, as well as provisions under the Securities Exchange Act of 1934 and Rule 10b-5. Both defendants consented to court judgments without admitting or denying the allegations.

Subject to court approval, the orders would impose permanent injunctions barring future violations. Shaikh would additionally face an officer-and-director bar and a conduct-based injunction. Disgorgement, prejudgment interest, and civil penalties remain to be determined by the court.

Broader Regulatory Context

The case emerges as the SEC advances its strategic priorities for digital assets, including a 2026-2030 plan focusing on blockchain technology, tokenization, and market infrastructure. Recent rulemaking efforts address crypto broker-dealers and trading systems, alongside potential exemptions for certain offerings.

This action aligns with other recent enforcement efforts by U.S. regulators targeting alleged investment frauds in the crypto space, underscoring ongoing scrutiny of schemes promising guaranteed returns from digital asset activities.