CFTC Cracks its ‘Largest Fraud’ Case Involving Bitcoin, Orders Offender to Pay $3.4B Penalty

A whopping $3.4 billion—that’s how much a Texas court has ordered Cornelius Johannes Steynberg, the CEO of Mirror Trading International Proprietary Limited (MTI) to pay in connection with a large-scale fraud case involving Bitcoin.

As part of the settlement, half of that amount will go toward providing restitution to victims of MTI’s fraudulent activities, with the other half designated as a civil penalty, the highest civil monetary penalty ordered in any CFTC case.

The U.S. Commodity Futures Trading Commission (CFTC), which obtained a court judgment against Steynberg and MTI on April 27, also said this is the largest fraudulent scheme involving Bitcoin charged in any of the agency’s cases to date.

According to the CFTC, an order of default judgment and permanent injunction against Steynberg and MTI has been entered by Judge Lee Yeakel of the U.S. District Court for the Western District of Texas.

The agency conceded, however, that “orders requiring payment of funds to victims may not result in the recovery of any money lost because wrongdoers may not have sufficient funds or assets.”

CFTC cracks international scheme

The CFTC initially charged Steynberg and his company in the summer of 2022.

Per the order, Steynberg engaged in an international fraudulent multilevel marketing scheme (MLM) to solicit Bitcoin from the public for participation in an unregistered commodity pool operated by MTI, a South Africa-based company.

From approximately May 2018 to approximately March 2021, Steynberg, as the controlling person of MTI, and the company falsely claimed to trade off-exchange retail forex through a proprietary “bot” or software program.

“Either directly or indirectly, the defendants misappropriated all of the Bitcoin they accepted from pool participants,” reads the order for final judgment.

The CFTC found that Steynberg, individually and as the principal and agent of MTI, accepted at least 29,421 Bitcoin, valued at over $1.7 billion at the end of March 2021, from at least 23,000 individuals in the U.S. and worldwide, to participate in the commodity pool without being registered as a commodity pool operator (CPO), as required by the law.

Steynberg has been held in Brazil on an Interpol arrest warrant since December 2021 and is still a fugitive from South African authorities, per the announcement.

In addition to the charges brought against him by the CFTC, Steynberg is also permanently banned from registering with the CFTC or trading in any CFTC-regulated markets.

This means that Steynberg will be unable to operate in any capacity that involves trading in commodity futures, options, or swaps, or engaging in retail foreign exchange trading, among other activities that are subject to CFTC oversight.