The SEC has filed partially settled charges against Mining Automatic and Zan Shaikh over an alleged crypto mining fraud that raised approximately $22 million from more than 380 investors, with only around 13% used for mining-related expenses.
SEC Files Partially Settled Charges Over Alleged $22 Million Crypto Mining Fraud
The US Securities and Exchange Commission (SEC) filed partially settled charges on 20 July 2026 against Florida resident Zan Shaikh and his company, Mining Automatic, alleging the misappropriation and misuse of investor funds. According to the complaint, the defendants raised approximately $22 million from more than 380 investors through a fraudulent scheme involving purported crypto asset mining. The case was filed in the US District Court for the District of Massachusetts.
Crypto asset mining involves participants providing computing resources to a crypto network to validate transactions, potentially receiving crypto asset rewards in return. The SEC determined that the defendants’ actual mining operations were insufficient to generate the level of returns promised to investors.
(Source: SEC complaint, as reported by FX News Group; published: 2026-07-20; court: US District Court for the District of Massachusetts.)
Relevant Period and Promised Returns
According to the complaint, the alleged conduct took place between June 2023 and May 2025. During this period, Shaikh and Mining Automatic promised investors fixed monthly returns from investments in the crypto asset mining project.
Scope of the Alleged Misrepresentations
The SEC alleges that the defendants made false representations during the fundraising process concerning the following matters:
Their experience, expertise and track record in crypto asset mining
The actual use of investor funds
The true operating condition of the crypto asset mining business
The reasons for failing to make monthly payments to investors on time
Flow of Funds and Amounts Involved
The complaint states that, although the defendants claimed investor funds would be used for crypto asset mining, only approximately 13% of the funds were actually spent on mining-related expenses. The SEC alleges that the remaining funds were primarily directed towards two purposes: marketing activities intended to attract new investors and the payment of Shaikh’s personal expenses and costs unrelated to the business.
Regarding the difference between funds received and repaid, the complaint states that the defendants collected at least $20 million more from investors than they returned to them.
| Item | Figure | Period | Details |
|---|---|---|---|
| Total funds raised | Approximately $22 million | 2023-06 to 2025-05 | Raised from more than 380 investors |
| Proportion spent on mining-related expenses | Approximately 13% | 2023-06 to 2025-05 | Remaining funds used for marketing and personal expenses |
| Difference between funds received and repaid | At least $20 million | 2023-06 to 2025-05 | Amount received in excess of funds returned to investors |
| Filing date | — | 2026-07-20 | Filed in the US District Court for the District of Massachusetts |
Charges and Settlement Arrangements
Alleged Violations of Securities Law
The SEC alleges that Shaikh and Mining Automatic violated the following provisions:
Section 5(a) of the Securities Act of 1933
Section 5(c) of the Securities Act of 1933
Section 17(a) of the Securities Act of 1933
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder
Agreed Settlement Terms
Shaikh and Mining Automatic have agreed to the entry of a court-approved judgement. The judgement will impose the following measures:
Permanently enjoin both defendants from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5;
Impose an officer-and-director bar against Shaikh;
Impose a conduct-based injunction against Shaikh;
Require the defendants to pay disgorgement, prejudgment interest and civil penalties in amounts to be determined by the court following a motion by the Commission.
The case is described as partially settled because liability and injunctive relief have been agreed, while the monetary amounts remain subject to a future court determination.
(Source: FX News Group, SEC files partially settled charges against Mining Automatic and Zan Shaikh; published: 2026-07-20.)
Questions About the SEC Crypto Mining Fraud Case
How much money is involved in the case?
According to the SEC complaint, the defendants raised approximately $22 million from more than 380 investors and collected at least $20 million more than they returned to investors.
When did the alleged conduct take place?
The complaint identifies the relevant period as June 2023 to May 2025. The SEC formally filed the charges on 20 July 2026.
How were investors’ funds actually used?
According to the complaint, only approximately 13% of investor funds were used for expenses related to crypto asset mining. The remainder was primarily used for marketing to attract new investors and to pay Shaikh’s personal expenses and costs unrelated to the business.
What is crypto asset mining?
Crypto asset mining involves participants providing computing resources to validate transactions on a crypto network, potentially receiving crypto asset rewards in return. The SEC determined that the defendants’ actual mining operations were insufficient to generate the returns they had promised.
What does “partially settled” mean?
It means that the defendants have agreed to a court judgement concerning liability and injunctive relief, but the specific amounts of disgorgement, prejudgment interest and civil penalties have not yet been determined. These amounts will be decided by the court following a motion by the Commission.
What restrictions will be imposed on Shaikh?
Under the settlement terms, he will be subject to permanent injunctions against violating the relevant securities laws, an officer-and-director bar and a conduct-based injunction.
Which court is hearing the case?
The action was filed in the US District Court for the District of Massachusetts. The allegations concern Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
