In a significant development, the Commodity Futures Trading Commission (CFTC) a U.S. government agency responsible for overseeing the futures and options markets announced on September 7 2023 that the U.S. District Court for the Western District of Texas entered a consent order against Mirror Trading International Proprietary Limited (MTI) on September 6 2023.
Statement of @CFTCjohnson Regarding CFTC Consent Order Imposing $1.7 Billion in Restitution against South African Commodity Pool Operator: https://t.co/X67qRllWfL
— CFTC (@CFTC) September 7, 2023
A consent order is a legal agreement between parties involved in a lawsuit or legal dispute. It is typically entered into voluntarily and with the consent of all parties, which is why it’s called a ‘consent’ order.
The order finds MTI liable for various violations, including fraud related to retail foreign currency (forex) transactions, fraud as a commodity pool operator (CPO), registration violations, and failure to comply with CPO regulations.
MTI, currently undergoing liquidation in South Africa, has been ordered to pay restitution exceeding $1.7 billion to victims of the fraud.
The consent order stems from a CFTC complaint filed on June 30 2022, and imposes permanent trading bans on MTI in CFTC-regulated markets, as well as a registration ban.
MTI and its CEO, Cornelius Johannes Steynberg, engaged in an international multi-level marketing scheme by which they solicited and accepted nearly 30,000 bitcoin from at least 23,000 people located in the U.S. for participation in a commodity pool that purportedly traded retail foreign currency on a leveraged, margined, and/or financed basis. MTI misappropriated virtually all of the money instead.
The order imposes restitution of over $1.7 billion against MTI, and effectively concludes a case that the CFTC filed in June 2022.
Previously, the U.S. District Court for the Western District of Texas entered a default judgment against Cornelius Johannes Steynberg, the founder and CEO of MTI on April 24, 2023. This default order mandates Steynberg to pay over $1.7 billion in restitution to defrauded victims and an additional civil monetary penalty of over $1.7 billion, marking the highest civil monetary penalty ever ordered in any CFTC case.
CEO of South Africa’s Bitcoin Ponzi Scheme, Mirror Trading International (MTI), Ordered to Pay Over $3.4 Billion by US Court
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… pic.twitter.com/TX49tsl9iy
— BitKE (@BitcoinKE) April 28, 2023
According to the order, from approximately May 2018 through approximately March 2021, Steynberg, both individually and as the controlling entity of MTI, orchestrated an international fraudulent multi-level marketing scheme.
The scheme aimed to solicit bitcoin investments for participation in an unregistered commodity pool operated by MTI. The commodity pool, under the control of MTI and Steynberg, purportedly engaged in off-exchange, retail forex trading through what the defendants falsely claimed was a proprietary ‘bot’ or software program.
During this period, Steynberg, who was deemed to be acting individually and as the principal of MTI, accepted a substantial amount of Bitcoin – equivalent to over $1.7 billion at the end of the relevant period – from at least 23,000 individuals in the U.S. and thousands more globally.
These funds were collected for participation in the commodity pool. According to the CFTC, the defendants misappropriated all the Bitcoin received from the pool participants, either directly or indirectly.
The CFTC advises that while orders requiring payment of funds to victims are essential for seeking justice, they may not guarantee the recovery of lost funds, as wrongdoers may lack sufficient assets or funds.
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