Crimes in the crypto space are commonplace. Although it has vastly reduced over the years, fraud and scams are still a point of concern. In a recent revelation, the CFTC (Commodity Futures Trading Commission) has sued Cornelius Johannes Steynberg for a fraudulent multilevel marketing (MLM) scheme. The scam involved the accumulation of 29K Bitcoin (BTC) worth over $1.7 billion.
Steynberg and his company, Mirror Trading International Proprietary Limited (MTI), have both been called into question. MTI was organized and operated under the laws of the Republic of South Africa. However, the company has been accused of fraud and registration violations.
One of the largest Bitcoin scams?
The lawsuit alleges that Steynberg participated in a worldwide fraudulent multilevel marketing scheme. This occurred from about May 18, 2018, to roughly March 30, 2021. He did this both as an individual and as the controlling person of MTI. The only goal was to solicit Bitcoin from the general public. The participants were asked to join a commodities pool run by MTI.
Steynberg accepted at least 29,421 Bitcoin (BTC) during the abovementioned period. The CFTC asserts that the defendants misappropriated all of the Bitcoin they received from the pool participants, either directly or indirectly. The value of the Bitcoin accumulated is around $1.7 billion.
The CFTC is pursuing civil monetary penalties. Moreover, they have called for a permanent trading and registration ban. They also ask for full restitution for defrauded investors. MTI will be asked for full disgorgement of ill-gotten gains. There will be a permanent injunction against further violations. They have breached the Commodity Exchange Act and also CFTC Regulations.
The CFTC warns victims that restitution orders might not get back the money or Bitcoin they lost. They say the accused might not have enough assets to reimburse the victims.
Sternberg is a wanted fugitive by South African authorities. However, he was just taken into custody in Brazil according to an INTERPOL arrest order.