The U.S. commodities regulator, Commodity Futures Trading Commission (CFTC), has filed civil charges against a South African company and its CEO for running a fraudulent commodity pool worth more than $1.7 billion in bitcoin, and over registration violations.
The regulator stated that the fraud scheme by Mirror Trading International Proprietary Limited (MTI), the South African bitcoin pool operator, and Cornelius Johannes Steynberg, its CEO, solicited bitcoin online from thousands of people, including 23,000 Americans, between May 2018 and March 2021.
The CFTC alleged that MTI had operated a scheme “to solicit, accept, and pool more than $1.7 billion to trade off-exchange, retail foreign currency (forex) on a leveraged, margined and/or financed basis.”
It said that instead of trading forex as MIT claimed, the company embezzled pool funds, misrepresented trading and performance, faked account statements and used a fake broker, where the trading happened. Just a fraction of the pooled 29,421 bitcoin was ever invested, the regulator said. Steynberg and the company also lied about using trading “bots”.
The Ponzi scheme is the largest involving bitcoin fraud the CTFC has handled.
“Defendants engaged in an international fraudulent multilevel marketing scheme via various websites, in addition to social media, to solicit bitcoin from members of the public for participation in their pool. At least 23,000 of the pool participants—most, if not all, of whom were not eligible contract participants—were from the United States,” CTFC said in a statement.
“The CFTC’s complaint seeks full restitution on behalf of defrauded participants, as well as disgorgement, civil monetary penalties, permanent trading and registration bans, and other relief.”
Steynberg was a fugitive until he was recently, as per the regulator, nabbed by Interpol in Brazil.