US SEC Sues Massachusetts Cryptocurrency Mining Company Mining Automatic: Features of a Ponzi Scheme

Coin Circle (120BTC.COm) reports: The U.S. Securities and Exchange Commission (SEC) filed a lawsuit on July 20 against Massachusetts-based cryptocurrency mining investment company Mining Automatic and its founder Zan Shaikh, accusing them of raising $22 million from over 380 investors while only about 13% of the funds were actually invested in mining operations. Details disclosed in the SEC's complaint indicate that most of the funds were directed towards advertising and the founder's personal expenses.

$22 Million Raised, Only 13% Went to Mining
Mining Automatic is operated by Bright Vision Distribution LLC based in Massachusetts. According to the lawsuit, the company promised investors stable monthly returns from cryptocurrency mining between June 2023 and May 2025, but the actual mining operations could not support the advertised profit levels.

The complaint shows that Mining Automatic earned approximately $1.1 million from mining but paid investors about $1.8 million in so-called "returns," with a $700,000 shortfall covered by the principal from new investors.

The SEC pointed out that this gave Mining Automatic "certain characteristics of a Ponzi scheme."

$7 Million in Advertising and Founder’s Personal Expenses
Mining Automatic spent about $7 million on advertising to attract new investors. Shaikh himself used investor funds to purchase real estate, vehicles, entertainment expenses, and transferred money to personal bank accounts.

By March 2025, Mining Automatic stopped paying returns to investors. According to the SEC, all investors have yet to recover their original principal, with over $20 million in principal still owed.

SEC Advances Strategic Plan for 2026-2030
This case also reflects the SEC's enforcement direction under Chairman Paul Atkins regarding cryptocurrencies. The SEC released its strategic plan for 2026-2030 in June, prioritizing blockchain technology, tokenization, and cryptocurrency market infrastructure as long-term goals while reaffirming its mission to protect investors.

In July, the SEC announced its legislative agenda for 2026, proposing new rules for cryptocurrency brokers, digital assets traded on national securities exchanges, and alternative trading systems, while providing exemptions and safe harbors for certain digital assets.

Meanwhile, the U.S. Congress is also advancing the "Digital Asset Market Clarification Act," which aims to clarify the respective jurisdictions of the SEC and the Commodity Futures Trading Commission (CFTC). The bill is expected to undergo a critical Senate vote before lawmakers' August recess.

Relief Sought by SEC
In this case, the SEC seeks the return of ill-gotten gains from Mining Automatic, civil penalties, and a permanent injunction, while also prohibiting Shaikh from selling securities or serving as an officer or director of a publicly traded company.

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