SA-Born Massive Crypto Scam Draws Largest-Ever Fine Globally

By  |  May 3, 2023

The founder of the South African company at the centre of one of the largest-ever crypto scams in history has been struck with what regulators are calling the highest civil monetary penalty ever in any case brought by the US Commodity Futures Trading Commission (CFTC).

According to a statement released by the nation’s top commodities watchdog, a U.S. court has ordered the CEO of bitcoin (BTC) pool operator Mirror Trading International (MTI) to pay USD 3.4 B in fines and restitution.

In June 2022, the CFTC filed a fraud complaint against South African national Cornelius Johannes Steynberg, stating that he was the “controlling person” at MTI who had taken 29,421 BTC (worth more than USD 1.7 B at the time) from 23,000 Americans, as well as people from other parts of the world, to operate an unlawful commodity pool operation.

The agency stated in a statement announcing the ruling by US District Judge Lee Yeakel that Steynberg engaged in a fraud connected to retail foreign currency transactions among other offences.

The commission claims that between 2018 and 2021, Steynberg participated in a global “fraudulent multi-level marketing scheme” to solicit Bitcoin from individuals for membership in an unlicensed commodity pool run by Mirror Trading, as WT had earlier reported.

“The order finds that Steynberg, the founder and CEO of Mirror Trading International Proprietary Limited (MTI), a company currently in liquidation in the Republic of South Africa, is 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,” reads part of the statement from the commission.

MTI operated an unregistered bitcoin trading outlet that offered its members a guaranteed 10 percent monthly return on investment by implementing what it called a specialized trading approach. The operation imploded in December 2020 following revelations of malfeasance culminating in the disappearance of Steynberg who was reported to have fled South Africa.

After Mirror Trading International (MTI) disappeared with more than USD 589 M in cryptocurrency, Chainalysis dubbed it the “by far biggest cryptocurrency scam in 2020 globally,” WT reported. Along with the United States, United Kingdom, Mexico, and Canada, South Africa also contributed more than half of the company’s traffic.

“Either directly or indirectly, the defendants misappropriated all of the Bitcoin they accepted from pool participants,” the CFTC said.

The court, however, warned that the declared penalty might not imply the recovery of the funds which victims lost to the MTI sham as the culpable party might not possess sufficient resources.

According to the CFTC, Steynberg, a wanted man by South African authorities, has been detained in Brazil since the end of 2021 as a result of an Interpol arrest warrant. The CFTC has permanently barred him from trading in any markets that are subject to its regulation.

It is also understood that MTI is undergoing liquidation in South Africa where a court recently declared MTI an unlawful pyramid scheme.

Featured Image Credits: Yahoo Finance

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