The CFTC secures a record-breaking $3.4 billion penalty against MTI’s CEO, Cornelius Steynberg, for a large-scale Bitcoin fraud scheme.
In an unprecedented victory, the U.S. Commodity Futures Trading Commission (CFTC) has secured a record-breaking $3.4 billion penalty payment in a Bitcoin-related fraud case. The Texas court ordered Cornelius Johannes Steynberg, CEO of Mirror Trading International Proprietary Limited (MTI), to pay the colossal sum for his involvement in a large-scale fraud scheme involving the popular cryptocurrency. This landmark decision highlights the CFTC’s determination to combat cryptocurrency fraud and protect investors in this rapidly evolving market.
Half of the $3.4 billion penalty will serve as restitution to the victims of MTI’s fraudulent activities, while the remaining amount will be a civil penalty. This sets a new high for civil monetary penalties in any CFTC case, demonstrating the severity of Steynberg’s actions.
CFTC Exposes MTI’s Deceptive Bitcoin Scheme
The U.S. District Court for the Western District of Texas, presided over by Judge Lee Yeakel, granted the CFTC’s request for a default judgment and permanent injunction against Steynberg and MTI. The CFTC first brought charges against Steynberg and his South Africa-based company in 2022, following an investigation into MTI’s international fraudulent multilevel marketing scheme (MLM).
Steynberg and MTI devised an intricate MLM scheme that solicited Bitcoin from unsuspecting members of the public to participate in an unregistered commodity pool. Moreover, under Steynberg’s control, MTI falsely claimed that they were trading off-exchange retail forex via a proprietary “bot” or software program between May 2018 and March 2021.
The final judgment order issued by the CFTC revealed that Steynberg and MTI unlawfully misappropriated all of the Bitcoin they obtained from pool participants. As both the principal and agent of MTI, Steynberg accepted no less than 29,421 Bitcoin, worth more than $1.7 billion at the end of March 2021. This sum was collected from over 23,000 individuals in the United States and around the world who joined the commodity pool without MTI registering as a commodity pool operator (CPO), as mandated by law.
Steynberg Faces Additional Penalites
Currently detained in Brazil under an Interpol arrest warrant since December 2021, Steynberg remains a fugitive from South African authorities. The CFTC’s charges are not the only repercussions Steynberg faces. He has also been permanently barred from registering with the CFTC or participating in any CFTC-regulated markets.
This prohibition ensures Steynberg will be unable to conduct activities related to trading commodity futures, options, or swaps or participate in retail foreign exchange trading, among other activities that fall under CFTC jurisdiction.
Although the CFTC acknowledges 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,” this groundbreaking case sends a powerful message to potential wrongdoers about the CFTC’s commitment to holding those who exploit cryptocurrency markets accountable.