SEC Lawsuit: $22M Crypto Mining Scheme Spent 13% on Mining

When payments lagged, Shaikh blamed the delays on outside factors and misrepresented the business's health. He also lied about his mining experience and past results, the complaint says.

The SEC charged the pair with violating the registration and antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The agency's Cyber and Emerging Technologies Unit, created to target crypto and online fraud, worked the case out of the Boston Regional Office.

Both defendants agreed to settle the civil charges without admitting or denying the allegations. A judge must approve the settlement. The SEC will seek disgorgement and civil penalties later. Shaikh also faces an officer-and-director ban.

The case is the latest SEC action against crypto mining investment operators. The CFTC, operating with a single commissioner overseeing the entire crypto market, sued North Carolina's Trevor Vernon and Argent Capital Management over an alleged $14 million commodity pool fraud earlier this month. The Department of Justice moved to dismiss its criminal case against the founder of BitClub Network, despite claims the mining scheme cost investors $722 million. A Taiwanese court sentenced the alleged operator of the BitShine exchange to 22 years in prison for fraud and money laundering.