The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against crypto mining investment firm Mining Automatic and its founder, Zan Shaikh, accusing them of raising $22 million from investors while allocating only a small portion of the money—about 13%—to mining operations.

According to the SEC’s complaint, the scheme was run through Massachusetts-based Bright Vision Distribution LLC. The agency alleges the business collected funds from more than 380 investors between June 2023 and May 2025, promising monthly, guaranteed returns tied to cryptocurrency mining.

Key takeaways

• The SEC alleges investors were promised guaranteed monthly returns from mining, despite the company generating far less revenue from mining than it paid out.
• Proceeds, according to the SEC, were heavily directed toward advertising and personal or unrelated expenditures rather than mining operations.
• The SEC says Mining Automatic stopped making investor payments by March 2025 and that investors had not recovered their principal.
• The regulator is also signaling a broader shift toward rulemaking for digital assets alongside enforcement actions.

SEC alleges mining payouts didn’t match promised returns

The core allegation in the SEC’s complaint is that the promotional claims did not reflect the operation’s financial reality. The agency states that Mining Automatic advertised payouts as returns from crypto asset mining while its mining activities allegedly produced only about $1.1 million.

Meanwhile, the SEC claims investors received roughly $1.8 million in purported returns. The agency argues that the shortfall required payments to be funded using money from other investors, describing the operation as having “some of the hallmarks of a Ponzi scheme.”

In addition to questioning the returns model, the SEC points to how investor funds were used. The complaint alleges that about $7 million was spent on advertising to attract additional investors, while Shaikh purportedly used investor money for real estate, vehicles, entertainment, and transfers into personal accounts.

Fundraising scope and alleged investor exposure

In its filing, the SEC says Bright Vision Distribution LLC collected the $22 million from more than 380 investors over a two-year span, from June 2023 through May 2025. The SEC also alleges that as the program unraveled, payments stopped by March 2025.

Once payments halted, the SEC contends that none of the investors had recovered their original investment amounts. The complaint states that more than $20 million in principal remains unpaid, according to the SEC’s allegations.

For investors and market participants, the lawsuit underscores a recurring risk in the crypto-adjacent “yield” space: returns tied to mining or other on-chain activities can be presented in a way that obscures financing gaps, and “guaranteed” payout language can draw closer scrutiny from securities regulators.

Regulator seeks penalties and restrictions on Shaikh

The SEC is seeking multiple remedies in the case, including disgorgement and civil penalties. The agency also requests permanent injunctions and asks the court to bar Shaikh from selling securities and from serving as an officer or director of a public company.

These requests reflect the SEC’s typical enforcement posture in cases that it frames as securities fraud and unregistered securities activity, particularly where the regulator argues investor money was misused and returns were not supported by the underlying business model.

The complaint is publicly available on the SEC’s website: SEC litigation document.

Enforcement arrives amid SEC’s stated rulemaking push

While the Mining Automatic case focuses on alleged wrongdoing by a specific operator, it is also landing during a broader period in which the SEC has emphasized building clearer regulatory frameworks for digital assets. Under Chair Paul Atkins, the agency has increasingly pointed to rulemaking efforts rather than relying solely on enforcement.

In June, the SEC published its 2026–2030 Strategic Plan, identifying blockchain technology, tokenization, and crypto market infrastructure among its long-term priorities while reaffirming its investor-protection mandate. Later, in July, the SEC outlined a 2026 rulemaking agenda that includes potential new rules for crypto broker-dealers, digital assets traded on national securities exchanges and alternative trading systems, and possible exemptions or safe harbors for certain digital asset offerings. (The SEC’s agenda was covered in earlier reporting by Cointelegraph: SEC crypto rule changes 2026 agenda.)

At the same time, congressional activity is also aimed at reshaping how U.S. oversight works across agencies. A proposed legislative package—referred to as the Digital Asset Market Clarity Act—would, if enacted, clarify the respective roles of the SEC and the Commodity Futures Trading Commission (CFTC). The bill is expected to face a key Senate vote before the August recess, according to the broader legislative timeline described alongside recent crypto oversight coverage.

In that context, the Mining Automatic lawsuit functions as both a case-specific warning and a signal of where the SEC may draw lines: where a company offers “investment” arrangements with promised returns, the regulator may treat the arrangement through a securities lens—especially when the underlying economics do not appear to support the payout structure.

What to watch next

Investors and builders should watch how the court addresses the SEC’s allegations about the mismatch between advertised mining returns and the company’s stated mining revenue, as well as whether the SEC’s accompanying push toward digital-asset rulemaking eventually narrows the space for similarly structured “guaranteed return” offerings. In the meantime, the case adds another enforcement datapoint for anyone evaluating crypto-linked investment products marketed as stable, predictable yield.

Key takeaways

• Stellar (XLM) continues to trade in narrow ranges as investors await the next major price catalyst.
• Derivatives data presents mixed signals, with bearish long-to-short ratios offset by positive funding rates for XLM.
• XLM remains below key moving averages, leaving its short-term outlook dependent on whether bulls can reclaim major resistance levels.

Stellar (XLM) is trading within narrow ranges on Tuesday as investors weighed conflicting signals from derivatives markets and on-chain activity. Stellar remains under pressure near an important support area.

The combination of bearish positioning in derivatives markets and improving funding rates suggests traders remain divided on the next major move, increasing the likelihood of heightened volatility in the coming sessions.

Derivatives data paints a mixed picture for XLM

Market positioning remains uncertain across both cryptocurrencies. According to CoinGlass, the long-to-short ratio stood at 0.81 for XLM on Tuesday. 

Ratios below one indicate that short positions continue to outnumber long positions, reflecting a cautious outlook among derivatives traders.

However, funding rates tell a different story. Stellar’s funding rate flipped positive on Monday and reached 0.0068%.

Positive funding rates indicate that traders holding long positions are paying those with short positions, a sign that bullish sentiment is gradually improving despite the dominance of bearish bets.

Data from CryptoQuant indicates selling pressure continues to dominate both the spot and derivatives markets, with large whale orders pointing toward cautious investor sentiment. 

This persistent selling activity could limit the token’s ability to sustain any meaningful upside in the near term.

Key support remains under pressure

Stellar was trading around $0.187, continuing to consolidate near a critical support zone.

The token remains below its 50-day EMA near $0.189, while hovering just above the 100-day EMA around $0.187, indicating that buyers are attempting to defend this level despite the broader bearish trend.

Momentum indicators remain relatively subdued. The RSI is positioned near 53, reflecting weak but stable momentum, while a slightly positive MACD reading points to consolidation rather than a strong directional move.

On the upside, Stellar faces immediate resistance at the 50-day EMA, followed by the 200-day EMA near $0.196 and the 61.8% Fibonacci retracement level around $0.200.

If selling pressure resumes, initial support lies at the 100-day EMA near $0.187, followed by the horizontal support at $0.177 and the 78.6% Fibonacci retracement around $0.173. A deeper correction could expose the long-term support level near $0.142.

With technical indicators sending mixed signals and derivatives markets reflecting growing indecision, both XRP and Stellar appear to be approaching a pivotal point where a decisive breakout or breakdown could determine their next medium-term trend.

Two other supports lined up behind the move. U.S. spot bitcoin ETFs have now drawn inflows for five straight sessions totaling more than $600 million, the most sustained institutional buying since mid-July and a reversal of the eight-week outflow run that ran through late June.

And oil, which had climbed for two days on the war, pulled back, with Brent falling 1% to about $88.58 as Iran said mediators were circulating proposals to ease hostilities, including a reported suggestion for a 10-day halt in strikes.

“Current bitcoin and ether prices are low but fair, given the macro uncertainties pervading markets,” said Jeff Mei, chief operating officer at BTSE, who pointed to the Fed meeting as the event traders are positioned around.

“Traders expect rates to hold steady but are looking for more signals as to what’s to come later in the year,” Mei added.

The read on that meeting is where the rally meets its limit. The Federal Reserve gathers July 28 and 29, and markets put the odds of a July rate increase at about 15%, though a September move is still live.

Spot-market volume across crypto stayed subdued even as prices rose, the sign of a tape lifted by returning risk appetite rather than fresh conviction, and higher oil and Treasury yields remain the levers that could keep the Fed hawkish and cap risk assets.

Federal regulators have extended the legal fallout from Celsius’ 2022 collapse by ordering two of the company’s former co-founders to pay more than $6 million to resolve Federal Trade Commission (FTC) allegations that they misrepresented the safety of the crypto lending platform.

On Monday, the FTC announced that Hanoch “Nuke” Goldstein, Celsius’ former chief technology officer, was ordered to pay $2.014 million. Shlomi Daniel Leon, the firm’s former chief strategy officer, was ordered to pay $4.1 million under a separate stipulated order entered on June 29.

Key takeaways

• Goldstein and Leon have been ordered to pay a combined $6.114 million to settle FTC consumer protection allegations tied to Celsius’ failure.
• The orders include marketing and sales bans affecting products or services that could be used to deposit, exchange, invest, or withdraw crypto assets.
• The FTC’s claims focus on alleged misstatements about Celsius’ reserves, insurance coverage, and whether loans were unsecured.
• The settlements build on a separate FTC resolution involving Alex Mashinsky, which already included a $10 million payment and a permanent marketing ban.
• Payments from the co-founders are also set to be credited against the FTC’s consumer-harm judgment tied to the case.

What the FTC says the co-founders got wrong

According to the FTC’s allegations, Celsius made assurances to customers about the platform’s financial safety that were not consistent with the company’s actual position as it moved toward bankruptcy. The regulator said Celsius falsely told customers it maintained sufficient reserves to satisfy withdrawal demands, claimed it had a $750 million insurance policy covering customer deposits, and represented that it did not issue unsecured loans.

The FTC further alleged that these public assurances persisted even shortly before the company’s collapse. As the agency put it in its statement Monday, the promises were allegedly false and “its top executives continued to claim that customers’ deposits were safe days before the company filed for bankruptcy.”

Goldstein and Leon are being held responsible for the misconduct the FTC described in connection with how Celsius marketed its operations during the period leading up to the shutdown.

Court-ordered bans restrict Celsius-related promotion and sales

Beyond the monetary payments, the FTC’s settlement terms also impose restrictions designed to limit future involvement in crypto custody and dealing workflows. The agency said the orders bar Leon from marketing or selling products or services that could be used to deposit, exchange, invest, or withdraw assets.

For Goldstein, the restrictions are similarly broad. The FTC’s statement Monday said Goldstein agreed to a ban on marketing or selling retail products or services that can be used to buy, sell, deposit, withdraw, distribute, or trade cryptocurrency.

“Similarly, Goldstein has agreed to a ban on marketing or selling retail products or services that can be used to buy, sell, deposit, withdraw, distribute or trade cryptocurrency.”

How the payments fit into the wider Celsius settlements

The settlements add another layer to the ongoing enforcement picture surrounding Celsius’ collapse and its impact on customers. The platform, which the settlement narrative places in a much larger consumer-harm context, held $25 billion in assets at its peak and owed $4.7 billion to users when it filed for bankruptcy in July 2022.

The FTC’s co-founder orders also relate directly to an earlier resolution involving Alex Mashinsky. In April, Mashinsky agreed to an FTC settlement that included a permanent ban from promoting asset-related products and a requirement to pay $10 million, alongside a broader, partially suspended $4.72 billion judgment.

In the current cases, the FTC said that the $2.014 million and $4.1 million payments from Goldstein and Leon, respectively, will be credited against the $4.72 billion judgment. That crediting mechanism is intended to prevent double-counting of consumer-harm-related penalties across related FTC outcomes.

Criminal case developments underscore the regulatory focus

While these are FTC consumer protection resolutions, other enforcement tracks have also advanced. Separately, US prosecutors have pursued criminal charges against Mashinsky. The filing timeline described in the source indicates Mashinsky pleaded guilty to commodities and securities fraud charges and was sentenced to 12 years in prison in May 2025.

Prosecutors, as described in the reporting referenced in the source, said he misled Celsius customers about the company’s profitability, investment risks, and the safety of customer funds. That criminal framing aligns with the FTC’s core theory in the co-founder cases: that customers were allegedly given assurances about safety and risk management that did not match reality.

For investors and industry participants, the practical takeaway is that Celsius-related enforcement is not confined to one executive or one courtroom. The FTC’s added restrictions on future marketing and sales of crypto asset-related products suggest regulators are targeting the ability of former insiders to re-enter similar distribution and promotion channels. Readers should watch whether additional Celsius-linked proceedings—civil or criminal—continue to expand the circle of accountability and how courts treat the scope of the marketing bans as the industry adapts to ongoing compliance demands.