CFTC accuses South African company and CEO of $ 1.7 billion fraud with bitcoin
The Commodity Futures Trading Commission has accused a South African commodity pool operator and its CEO of allegedly running a multi-level fraudulent marketing program that took in over $ 1.7 billion worth of bitcoin from at least 23,000 investors. It is the largest fraudulent scheme involving bitcoin charged in any CFTC case, according to the derivatives market regulator.
The CFTC charged Cornelius Johannes Steynberg from South Africa and the company he ran, Mirror Trading International Proprietary Limited, with fraud and registration infringement. The allegations claim that Steynberg set up and operated a global commodity pool in foreign currency through Mirror Trading International, which only accepted bitcoin, and that he and the company abused the more than 29,000 bitcoins they accepted from the pool participants.
According to CFTC’s complaint, the commodity pool, which was controlled by the company and Steynberg, allegedly traded foreign currency off the stock exchange on the gear, on a marginal and / or financed basis. This was done with participants who were not qualified contract participants through what Steynberg claimed was a proprietary software program, or fine.
The complaint alleges that Steynberg has made fraudulent omissions of material facts in solicitation of actual and potential pool participants. These omissions allegedly include failing to disclose that he and his company misused pool funds; that there was no “fine” trade on behalf of the participants; that no profitable trade took place on behalf of the participants; that the bank statements given to the participants were in fact simulated trades from “demo” accounts; that alleged “returns” paid to some participants were in fact principal contributions from other participants; and that the online broker Trade300, where Steynberg allegedly traded participants’ bitcoin, was a fake device he created.
The complaint states that of the more than 29,000 bitcoin Steynberg and his company accepted from the participants, they deposited just under 1,900 bitcoin and lost 566.6 bitcoin trades unprofitably.
“The defendant never acted profitably, never made a profit, and abused essentially all of the at least 29,421 Bitcoin they accepted from the participants,” the complaint states.
The CFTC seeks full redress for fraudulent investors, rejection of incorrect gains, civil fines, permanent registration and trading bans and a permanent injunction against future violations of the Stock Exchange Act and the CFTC regulations. Sternberg, a refugee from South African law enforcement, was recently remanded in custody in Brazil following an arrest warrant from Interpol.
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Tags: bitcoin, CFTC, civil enforcement, Commodity Futures Trading Commission, Cornelius Johannes Steynberg, Fraud, Mirror Trading International Proprietary
