He Raised $22 Million to Mine Crypto, Then Spent 13% of It on Mining

Mining Automatic promised 380 investors guaranteed monthly returns from crypto mining. Only 13% of the money ever touched a mining rig. The mining made $1.1 million. The company paid out $1.8 million. The gap is the whole scam: the returns were just new investors' money.

Mining Automatic raised $22M promising mining returns, then spent just 13% on mining.

A crypto mining company has one job: mine crypto. So when the SEC pulls back the curtain and shows that a mining company spent only 13 cents of every dollar on actual mining, you do not have a mining company. You have a Ponzi scheme wearing a mining company's clothes.

On July 20, 2026, the SEC announced partially settled fraud charges against Zan Shaikh, a Florida resident, and his company, legally registered as Bright Vision Distribution LLC and operating as Mining Automatic. The complaint, filed in the US District Court for the District of Massachusetts, alleges that between June 2023 and May 2025, Shaikh raised more than $22 million from over 380 investors by promising them guaranteed monthly returns of at least 3% from crypto mining operations. The pitch was the same one that has separated people from their money since long before crypto existed: give us your cash, we will put it to work in a business that generates steady income, and you will collect a reliable cut every month. Just, this time, the business was mining.

The problem is arithmetic, and the SEC laid it out cleanly. Of the $22 million raised, only about 13% went toward anything resembling actual mining, the computing resources you would need to validate blockchain transactions and earn rewards. The mining that did happen generated roughly $1.1 million in revenue. Meanwhile, the company paid investors around $1.8 million in what it called returns. Sit with those two numbers for a second, because they are the entire case. A business that earned $1.1 million paid out $1.8 million. That is not a profitable operation. That is a hole. And there is only one place the extra $700,000 in payouts could have come from: the pockets of newer investors.

That is the definition of a Ponzi scheme. Early investors are paid not from profits, because there are not enough profits, but from the deposits of later investors. The "returns" are real in the sense that money does arrive in your account. They are fake in the sense that they are not earnings; they are just other people's money passing through, briefly, on the way to collapse. As long as new money comes in faster than old investors cash out, the illusion holds. The moment recruitment slows, the whole thing falls in on itself, and the people who joined last lose everything.

So where did the rest of the $22 million go, if not into mining rigs and not fully into returns? The SEC says the largest chunk, roughly $7 million, went to marketing, spending to attract the next wave of investors. Read that back: the single biggest expense of a "crypto mining company" was advertising to recruit more depositors. That is not a side detail. In a Ponzi scheme, marketing is not overhead. It is the engine. The scheme literally cannot survive without a constant inflow of new victims, so the money that should have bought hardware instead bought the funnel that brought in the people whose deposits paid the earlier people. Shaikh also allegedly diverted more than $700,000 to personal expenses and put investor money into unrelated ventures.

The "guaranteed" in "guaranteed monthly returns" is the tell that should have stopped everyone at the door, and it is worth saying plainly because this scam will be run again next month under a new name. Legitimate mining returns cannot be guaranteed. Mining revenue swings with the price of the asset, the network difficulty, electricity costs, and hardware performance, all of which move constantly and none of which any operator controls. A real miner can tell you their hash rate. They cannot promise you 3% a month, every month, forever. The instant an investment "guarantees" a fixed return from a variable business, the fixed part is coming from somewhere other than the business. Usually it is coming from the next person in line.

Shaikh and his company agreed to partially settle the SEC's charges, which resolves some of the claims without admitting or denying the full allegations. Mining Automatic joins a crowded lineup of US mining-fraud cases, a category that stretches from small operations like this one up to schemes like BitClub Network, accused of defrauding investors of $722 million. The scale varies wildly. The structure almost never does. Someone promises that a mining operation will pay steady, guaranteed returns; the mining turns out to be a fraction of the story or entirely fictional; and the returns turn out to be a relay race of new deposits until the baton drops.

The uncomfortable takeaway is that you did not need to understand a single thing about crypto mining to spot this one. You only needed to ask two questions. Can this business actually generate the returns it is promising? And if it cannot, whose money am I actually being paid with? For 380 investors, the answer to the second question turned out to be: each other's.