US regulators have investigated an alleged investment scheme that promised guaranteed returns from crypto mining but delivered far less than advertised.
Securities and Exchange Commission (SEC) and to blame Mining Automatic is the founder of Zan Shaikh, saying that the project from Massachusetts has raised $ 22 million from hundreds of investors between 2023 and 2025.
“The Mining Automatic website claims that it has provided investors with the opportunity to earn stable income by relying on its expertise in crypto asset mining. The website also stated that its ‘superior services,’ ‘advanced technology,’ and ‘derivatives, low cost’ made it ‘deliver consistent returns’ in a way that is ‘future-proof’. ‘annual return’ of 51.5% in 2021, 46.2% in 2022 and 51.8% in 2023.”
The manager says that only about 13% of the money went to the actual mining operations, which generated about $1.1 million and paid $1.8 million to investors, creating a Ponzi-like structure.
The SEC says the business money was used for advertising and Shaikh spent the money on real estate, cars and personal accounts.
“Despite promising to use investors’ money to participate in crypto asset mining, Defendants spent approximately $7 million of the $22 million in Mining Automatic Investments on marketing and advertising to attract new investors. Defendants also spent $500,000 of investors’ money on marketing activities unrelated to Shaikh.
In addition, the Defendants spent large sums of money from investor funds through bank accounts and credit cards for Shaikh’s personal expenses, including real estate expenses ($375,575), entertainment ($76,547), car dealership ($151,750), and removal expenses ($118,585). Prosecutors also transferred $778,550 to Shaikh’s bank accounts. “
The SEC says payments are suspended until March 2025 and none of the 380 investors have repaid their initial investments, leaving more than $20 million in unpaid balances.
The SEC is seeking disbarment, sanctions and a ban on Shaikh from any securities or company positions.
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