Cornelius Johannes Steynberg, a fugitive who was CEO of the South African crypto scheme, Mirror Trading International (MTI), has been ordered by a US judge to pay over $3.4 billion in fines and restitution for a Bitcoin fraud scheme.
Today, a federal court ordered a South African CEO to pay more than $3.4 billion for forex fraud, making this the CFTC’s largest fraud scheme case involving bitcoin. Learn more: https://t.co/X2vmHIRLkh
— CFTC (@CFTC) April 27, 2023
According to the report, this is the highest civil monetary penalty ever in any case brought by the US Commodity Futures Trading Commission (CFTC). The CFTC is an independent agency of the US government that regulates the U.S. derivatives markets, which includes futures, swaps, and certain kinds of options.
Steynberg committed fraud tied to retail foreign currency transactions among other violations, the agency said in a statement announcing the order by US District Judge, Lee Yeakel.
According to the regulator, Steynberg took part in a global ‘fraudulent multi-level marketing scheme’ to solicit Bitcoin from people for participation in an unregistered commodity pool operated by Mirror Trading between 2018 and 2021.
“The order finds that Steynberg, the founder and CEO of Mirror Trading International Proprietary Limited (MTI), a company currently in liquidation in the Republic of South Africa, is liable for fraud in connection with retail foreign currency (forex) transactions, fraud by an associated person of a commodity pool operator (CPO), registration violations, and failure to comply with CPO regulations.”
Chainalysis declared Mirror Trading International (MTI) as ‘by far biggest cryptocurrency scam in 2020 globally‘, after the firm vanished with over $589 million worth of cryptocurrency. The firm received over half of its traffic from South Africa, in addition to the United States, United Kingdom Mexico and Canada.
According to the CFTC, MTI solicited at least 29,421 bitcoins worth more than $1.7 billion in March 2021 from at least 23,000 individuals in the US, and more from around the world, for participation in an unregistered commodity pool the company operated.
“Either directly or indirectly, the defendants misappropriated all of the Bitcoin they accepted from pool participants,” the CFTC said.
Despite the fine, the court warned that the penalty might not lead to the recovery of the lost money as wrongdoers may not possess sufficient funds or assets.
The CFTC has stated that Steynberg, who is a fugitive from South African law enforcement, has been held in custody in Brazil on an Interpol arrest warrant since the end of 2021. The CFTC has permanently prohibited him from trading in any markets regulated by the agency.
In South Africa, a court recently declared MTI an unlawful pyramid scheme:
“MTI’s business clearly amounted to an unlawful ponzi-scheme, i.e. a fraudulent investing scam promising high rates of return to investors and generating returns for earlier investors with investments taken from later investors,” South Africa’s High Court Judge, Alma de Wet, said.
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