The United States Commodity Futures Trading Commission (CFTC) said on April 27 that it had obtained a court judgment against a CEO involved in Bitcoin fraud.
The CEO was involved in Bitcoin MLM
The case in question concerns Cornelius Johannes Steynberg from South Africa, who was the founder and CEO of Mirror Trading International Proprietary Limited (MTI).
Steynberg engaged in an international multi-level marketing (MLM) program in which he solicited Bitcoin investments from the public.
Steynberg and his company promised investors the opportunity to participate in a commodity pool. Not only was this commodity pool unregistered, but Steynberg and MTI falsely portrayed the pool's trading activity as being operated by a bot when in fact they were trading retail currencies off-exchange. Both companies eventually diverted all Bitcoins from their investors.
Steynberg launched his MLM program in May 2018 and has solicited funds from over 23,000 people in the United States and around the world. He obtained nearly 30,000 BTC in total, an amount that was worth $1.7 billion when the scheme ended in March 2021.
Steynberg faces biggest civil fine ever against CFTC
The CFTC said it would fine Steynberg $3.4 billion. Half of this amount will be used to compensate the victims, while the other half will go to a civil penalty.
The above amount is the highest civil monetary penalty imposed by the CFTC, and the case itself is the largest fraud case involving Bitcoin to date.
Steynberg is also prohibited (or barred) from registering with the CFTC, participating in CFTC-regulated markets, and engaging in activities that violate commodity rules. Steynberg has been held in Brazil under an INTERPOL arrest warrant since December 2021 and remains at large from South African authorities, according to today's announcement.
The CFTC previously charged Steynberg's company directly in 2022. The agency has also taken action against numerous other crypto-related groups and individuals in recent months, including a Mango Markets hacker and the founders of OokiDAO.
Most notably, the CFTC announced charges against major cryptocurrency exchange Binance and a number of its executives in March.
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