The U.S. Securities and Exchange Commission filed suit Monday against Mining Automatic Inc. and its founder, alleging they raised $22 million from investors by promising guaranteed returns from cryptocurrency mining operations while diverting the vast majority of funds for personal use.
According to the complaint filed in federal court, Mining Automatic solicited investments between 2021 and 2023, marketing mining contracts that purportedly delivered fixed monthly yields of 8% to 12% regardless of market conditions. The SEC alleges the company deployed only a fraction of the $22 million raised on actual mining infrastructure, with the remainder spent on luxury vehicles, real estate, and personal expenses for founder Johnathan Reeves.
“Investors were told their capital would purchase and operate mining hardware in secure facilities,” said Gurbir Grewal, director of the SEC’s Division of Enforcement. “Instead, Reeves allegedly ran a classic Ponzi-style scheme, using new investor funds to pay earlier participants while enriching himself.”
The complaint charges Mining Automatic and Reeves with violating the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, as well as the registration provisions of both statutes. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties.
Reeves could not be reached for comment. Mining Automatic’s website was offline as of press time. The case underscores the SEC’s continued focus on crypto-adjacent investment schemes that promise risk-free returns — a hallmark of fraudulent offerings regardless of the underlying technology.
Source: Cointelegraph
