What to know:
- The SEC charged Zan Shaikh and Mining Automatic over an alleged $22 million crypto mining scheme targeting more than 380 investors.
- Regulators allege that only 13% of investor funds supported mining, while most financed marketing campaigns and Shaikh’s personal business expenses.
- Shaikh and Mining Automatic consented to the proposed judgments imposing permanent injunctions without admitting or denying the SEC’s allegations in court.
The U.S. Securities and Exchange Commission has charged Florida resident Zan Shaikh and his company, Mining Automatic, with allegedly defrauding hundreds of investors through a crypto mining investment scheme worth about $22 million. The regulator claims that the operation attracted more than 380 investors by promising guaranteed monthly returns that it could not deliver.
According to the SEC, the alleged scheme operated between June 2023 and May 2025. During that period, Shaikh and Mining Automatic promoted a crypto asset mining business that promised consistent monthly profits. However, the agency alleges the mining operation failed to generate enough revenue to support those commitments.
Instead, the SEC claims that the company directed only about 13% of investor funds toward expenses related to the supposed mining business. Consequently, most of the money allegedly served other purposes that investors had not approved.
Moreover, the complaint alleges that Shaikh and Mining Automatic misrepresented their experience, expertise, and performance in the crypto mining sector. The SEC also claims that they provided inaccurate information about the company’s operations and the reasons behind delayed investor payments.
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SEC Alleges Investor Funds Supported Marketing and Personal Spending
According to the complaint, Shaikh and Mining Automatic collected at least $20 million more than they repaid to investors. Rather than expanding mining operations, the SEC alleges that much of the money funded marketing campaigns designed to attract additional participants.
Additionally, the regulator claims Shaikh used investor funds to cover personal expenses and unrelated business costs. Those alleged activities, the SEC argues, differed significantly from the investment strategy presented to clients.
The complaint also states that investors received misleading explanations whenever promised monthly payments failed to arrive. Consequently, many investors allegedly remained in the program without knowing its actual financial condition.
Besides challenging the company’s handling of investor funds, the SEC alleges that Shaikh and Mining Automatic violated provisions of both the Securities Act of 1933 and the Securities Exchange Act of 1934. The regulator has asked the court to impose permanent injunctions preventing future violations of those laws.
Court filings show that Shaikh and Mining Automatic have consented to the entry of judgments without admitting or denying the SEC’s allegations. Those proposed judgments would permanently prohibit future violations of the securities laws cited in the complaint.
Conclusion
The SEC’s latest enforcement action highlights its continued scrutiny of crypto investment businesses that promise fixed returns without adequate support. The case will now proceed through the legal process as the regulator seeks permanent court orders and additional remedies permitted under federal securities laws.
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