The US Securities and Exchange Commission filed charges on July 20 against Zan Shaikh, a Florida resident and CEO of Mining Automatic, alleging he raised more than $22 million from over 380 investors through a fraudulent cloud mining operation that the SEC says bears "some of the hallmarks of a Ponzi scheme."

The complaint, filed in the US District Court for the District of Massachusetts, names Mining Automatic and Bright Vision Distribution LLC, the company through which Mining Automatic operated, a Massachusetts-registered entity based in Marlborough.

The SEC alleges the scheme ran from June 2023 through May 2025, during which Shaikh promised investors guaranteed monthly returns of at least 3% from cryptocurrency mining operations. Both Shaikh and the company have agreed to a partial settlement without admitting or denying the allegations. A court will determine the final penalties, disgorgement amounts, and prejudgment interest. As part of the settlement, Shaikh faces a permanent bar from selling securities and from serving as an officer or director of any company.

What the Money Actually Bought

The SEC's complaint draws a sharp contrast between what investors were told and where their funds went. Of the $22 million raised, only around 13% was deployed into actual mining operations, generating roughly $1.1 million in mining revenue. Yet Mining Automatic paid out approximately $1.8 million to investors as purported returns, a gap the SEC says was filled using capital from newer investor funds rather than genuine profits.

Approximately $7 million went toward marketing and recruiting additional investors. Shaikh personally diverted more than $700,000 for real estate purchases, vehicles, entertainment, and personal bank transfers, according to the complaint. By March 2025 the scheme had stopped paying investors entirely, and more than $20 million in principal remains unrecovered. No investor has recouped their original investment.

A civil lawsuit, Thomas Elkins vs. Bright Vision Distribution LLC (Case 25-CV-0945), had already been filed against the company before the SEC acted, indicating investor complaints and legal action were underway ahead of federal intervention. The Better Business Bureau's profile for Bright Vision Distribution also shows a pattern of public complaints predating the SEC case. Fraud-monitoring services had flagged the operation as well: Zorya Capital independently identified Mining Automatic as a potential scam before federal charges were filed.

The SEC Unit Behind the Case

The charges came from the SEC's Cyber and Emerging Technologies Unit (CETU), established on February 20, 2025, to replace the earlier Crypto Assets and Cyber Unit. The CETU comprises 30 fraud specialists and attorneys and is led by inaugural chief Laura D'Allaird. The Mining Automatic case was handled through the SEC's Boston Regional Office.

The unit reflects a deliberate strategic shift: the SEC has pulled back from broad litigation over whether specific crypto assets qualify as securities, while intensifying pursuit of retail investor fraud. Running alongside the CETU is Commissioner Hester Peirce's Crypto Task Force, which focuses on building a longer-term regulatory framework for the crypto industry. In its fiscal year 2025 enforcement summary, the SEC described the change as "a necessary course correction" and affirmed that it retains anti-fraud jurisdiction regardless of broader policy deregulation in the crypto space.

As legal analysts covering the shift have put it: fraud is fraud.

A Template Repeated Across Three Continents

The Mining Automatic mechanics, guaranteed hash-power returns paid monthly, are not unique to the United States.

Nigeria's Crypto Bridge Exchange (CBEX) collapsed in April 2025 after raising an estimated 1.3 trillion naira (roughly $840 million) from Nigerian and Kenyan investors over nine months, promising returns as high as 100%.

Kenya's BTCM scheme impersonated BIT Mining Limited, a legitimate Hong Kong-listed mining company, and promised returns between 188% and 350% achievable within days before collapsing.

In Zambia, an Interpol-assisted investigation identified 65,000 victims of high-yield crypto investment fraud with estimated losses of $300 million.

In India, authorities seized $190 million in cryptocurrency linked to the BitConnect Ponzi scheme and have been pursuing fugitive founder Satish Kumbhani, a case that illustrates how the regional exposure to guaranteed-return crypto fraud extends well beyond Africa.

These regions share underlying vulnerability factors that help explain why such schemes take hold. Nigeria carries a financial literacy rate of only 38%, limiting retail investors' ability to evaluate scheme legitimacy. Kenya's rapid mobile-money adoption has outpaced equivalent scam-awareness infrastructure. India's large and under-regulated retail crypto base has similarly created fertile ground for guaranteed-return platforms.

The pattern across all these cases is structurally identical to Mining Automatic: a mining or trading premise, guaranteed fixed returns, heavy reliance on recruitment spending, and a gap between claimed and actual revenue bridged by new investor funds.

Genuine crypto mining operations require industrial-scale hardware, cheap electricity, and current-generation application-specific integrated circuits (ASICs, the specialized chips used for mining). Their output fluctuates with cryptocurrency prices and network difficulty adjustments. Legitimate cloud mining arrangements do exist, including through established platforms such as Antpool and Foundry, but their returns are subject to the same market variability as any mining operation. No legitimate mining operation can guarantee a fixed monthly percentage return under those conditions, whether the investor is in Lagos, Mumbai, or Miami.

What Comes Next

The FBI's 2025 Internet Crime Report recorded $11.4 billion in US crypto fraud losses last year, a 22% increase year over year, with investment scams accounting for $7.2 billion of that total, a figure that itself represents a 25% rise within the investment scam subcategory. Chainalysis estimates global crypto fraud losses reached $17 billion in 2025. The average US victim reported losses of $62,604.

Law enforcement has also moved proactively to limit further harm. Through FBI Operation Level Up, agents notified more than 8,000 potential victims before their losses were locked in, preventing more than $500 million in total losses, including $225.9 million in 2025 alone.

The SEC's willingness to pursue a mid-tier $22 million case, rather than reserving enforcement resources for billion-dollar frauds, carries implications for regulators building crypto oversight frameworks in Nigeria (the Securities and Exchange Commission), Kenya (the Capital Markets Authority), India (the Securities and Exchange Board of India), and Pakistan (the Securities and Exchange Commission of Pakistan), all of which are developing enforcement approaches to protect retail investors from similar schemes.

Cases like this one provide a procedural template. For investors, the immediate practical lesson is unchanged: verify registration with a national regulator before transferring funds, and treat any platform promising a fixed monthly mining return as a significant warning sign regardless of where it is based.

For the more than 380 Mining Automatic investors who lost money, the outcome remains unresolved. Penalties, disgorgement amounts, and prejudgment interest are all pending a final determination by the court, and no timeline for that ruling has been announced.