CFTC fines South African CEO $3.4B over Bitcoin MLM scheme

The U.S. Commodity Futures Trading Commission (CFTC) said on April 27 that it has obtained a court judgment against a CEO involved in Bitcoin-related fraud.

CEO was involved in Bitcoin MLM

The case in question concerns Cornelius Johannes Steynberg of South Africa, who was the founder and CEO of Mirror Trading International Proprietary Limited (MTI).

Steynberg engaged in an international multi-level marketing (MLM) scheme in which he solicited Bitcoin investment from the public.

Steynberg and his company promised investors the opportunity to participate in a commodity pool. Not only was that commodity pool unregistered, Steynberg and MTI falsely portrayed the pool’s trading activity as bot-operated when in fact they traded off-exchange retail forex. The two pwraties ultimately misappropriated all of their investors’ Bitcoin.

Steynberg began his MLM scheme in May 2018 and solicited funds from more than 23,000 individuals in the U.S. and globally. He obtained nearly 30,000 BTC in total, an amount that was worth $1.7 billion when the scheme concluded in March 2021.

Steynberg faces CFTC’s largest civil fine ever

The CFTC said it will fine Steynberg $3.4 billion. Half of that amount will go toward providing restitution to victims, while the other half will go toward a civil penalty.

The above amount is the highest civil monetary penalty imposed by the CFTC, and case itself is the agency’s largest fraud case involving Bitcoin to date.

Steynberg is also enjoined (or barred) from registering with the CFTC, participating in CFTC-regulated markets, and engaging in activity that violates commodities rules. Steynberg has been held in Brazil on an INTERPOL arrest warrant since December 2021 and is still a fugitive from South African authorities, today’s announcement says.

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 OokiDAO’s founders.

Most notably, the CFTC announced charges against the major cryptocurrency exchange Binance and a number of its executives in March.

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