Bitcoin Fraud Case: CFTC Pockets Record $3.4 Billion Judgement

Lavina Daryanani
Source: CryptoSlate

A federal judge in Texas has ordered the head of a South African firm to pay $3.4 billion in connection to a Bitcoin fraud case. Cornelius Johannes Steynberg has been asked to pay $1.7 billion in restitution to victims of the fraud scheme. Alongside, he’s supposed to pay $1.7 billion as a civil penalty. This case is CFTC’s “largest fraud scheme” ever involving Bitcoin.

The CFTC formally charged Steynberg in July 2022. According to the Commission, his firm Mirror Trading received Bitcoin online from thousands of people. This was done so to operate a commodity pool. The firm purportedly traded off-exchange, retail foreign currency with ineligible trade participants, according to the regulator. The CFTC labeled this to be an “international fraudulent multilevel marketing scheme.”

Additionally, the agency claimed that MTI and Stynberg controlled the commodity pool. However, the defendants “falsely claimed” that there was a proprietary “bot” or software program involved.

Stynberg and MTI “misappropriated all of the Bitcoin”

According to the official CFTC statement,

“During this period, Steynberg, individually and as the principal and agent of MTI, accepted at least 29,421 Bitcoin—with a value of over $1,733,838,372 at the end of March 2021—from at least 23,000 individuals in the U.S., and even more throughout the world, to participate in the commodity pool without being registered as a CPO as required.”

Also Read: CFTC Labels Bitcoin, Ethereum, and Tether As “Commodities”

By doing so, the defendants “misappropriated all of the Bitcoin” they accepted from pool participants, either directly or indirectly. According to the official statement,

“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.”

In March this year, the CFTC charged Binance and its founder CZ for the “willful evasion” of the law and “operating an illegal digital asset derivatives exchange.” Additionally, the CFTC commissioner Kristin N. Johnson recently asserted that there isn’t an immediate path forward.

Also Read: Binance v. CFTC: No “Immediate Path Forward” Commissioner Confirms