CFTC Fines South African CEO $3.4B Over Bitcoin MLM Scheme
The US Commodity Futures Trading Commission (CFTC) said on April 27 that it has obtained a court verdict against a CEO involved in Bitcoin-related fraud.
CEO was involved in Bitcoin MLM
The current case concerns Cornelius Johannes Steynberg from South Africa, who was the founder and managing director of Mirror Trading International Proprietary Limited (MTI).
Steynberg engaged in an international multi-level marketing (MLM) scheme 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, Steynberg and MTI falsely portrayed the pool’s trading activity as bot-operated, when in fact it traded off-exchange for retail currency. The two pwraties eventually misused all the investors’ Bitcoin.
Steynberg began his MLM scheme in May 2018 and solicited funds from more than 23,000 individuals in the US and globally. He obtained almost 30,000 BTC in total, an amount that was worth $1.7 billion when the scheme ended in March 2021.
Steynberg faces the CFTC’s largest civil fine ever
The CFTC said it will fine Steynberg $3.4 billion. Half of this amount will go towards providing compensation to victims, while the other half will go towards a civil penalty.
The amount above is the largest civil monetary penalty imposed by the CFTC, and the case itself is the agency’s largest fraud case involving Bitcoin to date.
Steynberg is also required (or barred) from registering with the CFTC, participating in CFTC-regulated markets and engaging in activity that violates commodity rules. Steynberg has been held in Brazil on an Interpol warrant since December 2021 and remains on the run from South African authorities, today’s announcement said.
The CFTC previously charged Steynberg’s company directly in 2022. The agency has also taken action against a number of 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 major cryptocurrency exchange Binance and a number of its executives in March.
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