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SEC sues Mining Automatic and founder over alleged $22M scheme
The SEC alleges the operation generated about $1.1 million from mining but paid roughly $1.8 million in promised returns, while principal of more than $20 million remains unpaid.
The US Securities and Exchange Commission has sued crypto mining investment business Mining Automatic and its founder, Zan Shaikh, alleging they raised $22 million from investors by promising guaranteed monthly returns from crypto mining.
According to the complaint, Mining Automatic operated a business that the SEC says could not produce the advertised payouts, spending only about 13% of investor funds on mining operations. The SEC also alleges the money was used for marketing, personal expenses, and unrelated ventures, including about $7 million on advertising to attract new investors.
The SEC alleges the mining operation generated about $1.1 million while paying investors roughly $1.8 million in purported returns, and that some payments were funded with money from other investors, which the SEC describes as having hallmarks of a Ponzi scheme. It says Shaikh used investor funds for real estate, vehicles, entertainment, and transfers to personal accounts.
The SEC says Mining Automatic stopped paying investors by March 2025, and that none of the investors had recovered their original investment. The agency is seeking disgorgement, civil penalties, and permanent injunctions, plus orders barring Shaikh from selling securities or serving as an officer or director of a public company, the outlet reported.