The United States Securities and Exchange Commission (SEC) indicated on 20 December that it had indicted Mining Automatic and his owner, Zan Shaikh. According to the regulator, the two individuals collected approximately $22 million from more than 380 investors through so-called encrypted mining operations, during which they claimed to provide a stable monthly return.
Fund-raising and funding.
The SEC alleged that the company operated between June 2023 and May 2025. Investors were told that the funds would be used to purchase computing resources to validate the trade in block chains and to obtain an incentive to dig.
However, regulators have indicated that actual mining revenues are not sufficient to meet commitments. According to the SEC, only about 13 per cent of the funds raised were spent on mining-related costs, while the rest went to marketing, personal expenses and other unrelated business.
Regulatory allegations
The Commission also asserts that Shaikh and Mining Automatic made false representations about their mining experience, technical capability, past performance and the use of funds. They also provided misleading explanations to investors as the repayments were delayed.
According to the pleadings, the project had less than $20 million returned to investors. The SEC charged both defendants with violating the registration and anti-fraud provisions of the Securities Act and requested the court to approve subsequent injunctions and fine arrangements.
Follow-up
At present, Shaikh and Mining Automatic have agreed to the court decision, but have not admitted or denied the charges. If approved by the court, the parties will be permanently prohibited from reoffending the relevant securities law.
The SEC further states that the case was investigated jointly by its network with the Emerging Technology Department and the Boston Regional Office.