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CFTC Fines South African CEO $3.4B Over Bitcoin MLM Scheme

On April 27, the United States Commodity Futures Trading Commission (CFTC) announced that it had obtained a court judgment against a CEO involved in Bitcoin-related fraud.

At the time of the case, Cornelius Johannes Steynberg of South Africa was the founder and CEO of Mirror Trading International Proprietary Limited (MTI).

Steynberg ran an international multi-level marketing (MLM) scheme in which he solicited public Bitcoin investment. Steynberg and his company promised investors the chance to join a commodity pool. Not only was that commodity pool unregistered, but Steynberg and MTI misrepresented the pool’s trading activity as bot-operated when it was actually off-exchange retail forex trading. The two pwraties eventually stole all of their investors’ Bitcoin.

Steynberg launched his MLM scheme in May 2018 and has raised funds from over 23,000 people in the United States and around the world. He received nearly 30,000 BTC in total, a sum worth $1.7 billion when the scheme ended in March 2021.

The CFTC announced a $3.4 billion fine against Steynberg. Half of that amount will be used to compensate victims, while the other half will be used to pay a civil penalty.

The CFTC has imposed the highest civil monetary penalty in its history, and this is the agency’s largest fraud case involving Bitcoin to date.

Steynberg is also barred from registering with the CFTC, participating in CFTC-regulated markets, and engaging in commodities-related activity. According to today’s announcement, Steynberg has been held in Brazil on an INTERPOL arrest warrant since December 2021 and is still a fugitive from South African authorities.

Steynberg’s company was previously charged directly by the CFTC in 2022. In recent months, the agency has also taken action against a number of other crypto-related groups and individuals, including a Mango Markets hacker and the founders of OokiDAO.

In March, the CFTC announced charges against the major cryptocurrency exchange Binance and several of its executives.

 

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