Mirror Trading International (MTI), a South African Bitcoin trading firm, has been ordered to pay $3.4 billion in restitution and civil penalties to defrauded victims in a US federal court. The Commodity Futures Trading Commission (CFTC) had filed a civil lawsuit against the firm and its executive, Cornelius Johannes Steynberg, in June 2022, alleging that they had run a fraudulent Bitcoin commodity pool worth over $1.7 billion.
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 CFTC’s case, Steynberg allegedly led an international fraudulent multilevel marketing scheme through MTI between May 2018 and March 2022. The scheme solicited members of the public for participation in an unregistered commodity pool, accepting at least 29,421 Bitcoins from at least 23,000 individuals in the US and worldwide. The CFTC alleges that Steynberg and MTI misappropriated all of the Bitcoin they received from pool participants and that the commodity pool was not registered as required.
CFTC Goes for Crypto Compliance
The CFTC has taken up several compliance actions in the crypto space, and this case against MTI is the largest civil monetary penalty ever ordered in any commodities case. In March 2022, the regulator filed a complaint against the largest cryptocurrency exchange, Binance, and its top executives, alleging that they had actively solicited US users with allegations of insider trading and KYC norms.
“The executive and the company are 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.”
The former CFTC Chairman Chris Giancarlo believes that authorities can successfully interact with cryptocurrencies if they have the motivation to do so.
He said, “We’re still very much the guardians of an old system.”
The CFTC’s actions against MTI and Binance show that they are committed to regulating the crypto space and ensuring that fraudsters and bad actors are held accountable.