The U.S. securities regulator alleges that the crypto mining investment business diverted investor funds while promising guaranteed monthly returns. Moreover, a proposed partial settlement is now awaiting court approval.
The U.S. Securities and Exchange Commission (SEC) has filed civil charges against Florida resident Zan Shaikh and his company Bright Vision Distribution LLC, which operated under the name Mining Automatic. The agency alleges they orchestrated a fraudulent crypto mining investment scheme. This scheme raised approximately $22 million from more than 380 investors. The complaint was filed on July 20, 2026, in the U.S. District Court for the District of Massachusetts. It was filed alongside a proposed partial settlement. That proposed settlement remains subject to court approval. According to the SEC’s litigation release and complaint, the defendants neither admitted nor denied the allegations as part of the proposed settlement.
SEC Alleges Investor Funds Were Largely Diverted From Mining Operations
According to the SEC complaint, the alleged scheme operated between June 2023 and May 2025. Mining Automatic marketed investment opportunities tied to cryptocurrency mining, promising investors guaranteed monthly returns generated through digital asset mining activities.
The regulator alleges those representations were misleading because the mining business generated insufficient revenue to support the promised payouts. Instead, the SEC claims only around 13% of investor capital was spent on expenses related to the purported mining operations.
The complaint further alleges that the defendants used substantial amounts of investor money to finance marketing campaigns designed to attract additional investors. They also paid Shaikh’s personal expenses and costs associated with unrelated business ventures.
According to the SEC, investors collectively contributed at least $20 million more than they ultimately received back through repayments. This left a significant funding gap that forms a central element of the regulator’s fraud allegations.
Partial Settlement Does Not Resolve Financial Penalties
The SEC charged Shaikh and Mining Automatic with violating the registration and anti-fraud provisions of the Securities Act of 1933. It also charged them with violating the anti-fraud provisions of the Securities Exchange Act of 1934, including Rule 10b-5.
As part of the proposed partial settlement, the defendants consented without admitting or denying the SEC’s allegations to permanent injunctions against future violations of the cited securities laws. The proposed judgment would also impose an officer-and-director bar on Shaikh. In addition, it would impose a conduct-based injunction against him if approved by the court.
However, the amount of any disgorgement, prejudgment interest, and civil monetary penalties has not yet been determined. Those financial remedies will be decided later following a motion by the SEC.
Case Reflects Continued SEC Focus on Crypto Investment Schemes
The action represents another example of the SEC’s continued enforcement campaign. It targets digital asset investment programs that allegedly promise fixed or guaranteed returns to retail investors.
Rather than focusing on cryptocurrency trading platforms or token issuers, this case centers on an investment program marketed around crypto mining infrastructure. The SEC alleges investors were misled regarding the company’s mining expertise, operational capacity, use of investor funds, and explanations for delayed investor payments.
The investigation was conducted by attorneys from the SEC’s Cyber and Emerging Technologies Unit together with staff from the agency’s Boston Regional Office. According to the litigation release, the investigation was supervised by Laura D’Allaird. Litigation will be led by Kathleen Shields.
Why The Case Matters
Crypto mining investments continue to attract retail investors because they offer exposure to digital assets without requiring participants to purchase or operate mining equipment themselves. Furthermore, that structure also creates opportunities for investors to rely heavily on information supplied by promoters regarding mining capacity, operating costs, and expected returns.
The SEC’s allegations highlight several warning signs regulators have repeatedly emphasized in crypto investment cases. These include promises of guaranteed returns, limited transparency regarding the use of investor funds, and heavy spending on marketing while underlying operations allegedly fail to generate sufficient revenue.
Because the case remains a civil enforcement action, the allegations have not been proven in court. Investors should distinguish between the SEC’s claims and any eventual judicial findings.
What Happens Next
The proposed settlement now awaits approval from the federal court in Massachusetts.
If approved, the injunctions against Shaikh and Mining Automatic would become permanent. However, separate proceedings will determine the amount of disgorgement, interest, and civil penalties.
The litigation may also produce additional filings that provide greater detail regarding investor losses, the defendants’ financial records, and the disposition of investor assets. Those filings will likely become important reference points as the case progresses through federal court.
