Key Takeaways
- A South African company MTI and its CEO are being prosecuted by the US Commodity Futures Trading Commission (CFTC) for operating a fraudulent commodity pool with over $1.7Bn in Bitcoin.
- This is the largest Bitcoin fraud scheme ever reported to the CFTC, with 23,000 Americans among the thousands of complainants.
- Restitution orders may not lead to the restoration of lost money,” the CFTC cautioned victims, since the wrongdoers “might not have sufficient money or assets.”
A South African company and its CEO have been charged civilly by the U.S. commodities regulator, the Commodity Futures Trading Commission (CFTC), for operating a fraudulent commodity pool worth more than $1.7 billion in bitcoin and for registration violations.
A “South African pool operator and CEO” has been charged by the CFTC with a $1.7 billion bitcoin fraud, according to a statement released on Thursday. The regulator further added that:
“The CFTC’s largest fraud scheme case involving bitcoin is this action.”
Cornelius Johannes Steynberg of Stellenbosch, Western Cape, Republic of South Africa, and Mirror Trading International Proprietary Limited (MTI) were investigated for fraud and infringements of registration in the case, which was filed in the US District Court for the Western District of Texas.
Because the wrongdoers “might not have sufficient funds or assets,” the CFTC warned victims, “restitution orders may not result in the recovery of lost money.”
The regulator claimed that between May 2018 and March 2021, thousands of people, including 23,000 Americans, were solicited to send bitcoin through the internet by Mirror Trading International Proprietary Limited (MTI), the South African bitcoin pool operator, and Cornelius Johannes Steynberg, its CEO.
The CFTC explained that “Steynberg, individually and as the controlling person of MTI, engaged in an international fraudulent multilevel marketing scheme to solicit bitcoin from members of the public for participation in a commodity pool operated by MTI” from approximately May 18, 2018, through March 20, 2018. It added more information by saying:
Steynberg accepted at least 29,421 Bitcoin during this time, which had a final value of more than $1,733,838,372 at the time.
Contrary to what MIT claimed, the company misrepresented trading and performance, faked account statements, and used a fictitious broker, where the trading took place, in addition to embezzling pool funds. The regulator claimed that only a small portion of the combined 29,421 Bitcoin was ever invested. Steynberg and the business also made false claims about using trading “bots.”
The CFTC also requests “permanent registration and trading bans, civil monetary penalties, disgorgement of ill-gotten gains, and a permanent injunction against future violations of the Commodity Exchange Act and CFTC Regulations,” according to the announcement.
The CFTC announced in May that it was adding resources to monitor the cryptocurrency market, and the charges against Steynberg and MTI are its most recent actions.
Gemini Trust Company LLC, also known as Gemini, was the subject of a complaint from the CFTC earlier this month for allegedly deceiving regulators in 2017. The cryptocurrency exchange allegedly made “materially false or misleading statements” in order to obtain approval for its Bitcoin futures product, according to the CFTC.
The CFTC’s complaint calls for restitution, civil monetary penalties, perpetual trading and licensing bans, as well as other alleviation on behalf of the participants who were defrauded.
The CTFC deduced, Sternberg is a wanted criminal in South Africa, but was recently arrested in the Federative Republic of Brazil pursuant to an Interpol arrest warrant.
