A whopping $3.4 billion – that’s how much a Texas court has ordered Cornelius Johannes Steynberg, CEO of Mirror Trading International Proprietary Limited (MTI) to pay in connection with a large-scale fraud case involving Bitcoin.
As part of the settlement, half of this amount will go to provide restitution to victims of MTI’s fraudulent activities, while the other half will be designated as a civil penalty, the largest civil monetary penalty ordered in any CFTC case.
The US Commodity Futures Trading Commission (CFTC), which obtained a court verdict against Steynberg and MTI on April 27, also said this is the largest fraudulent scheme involving Bitcoin prosecuted in any of the agency’s cases to date.
According to the CFTC, Judge Lee Yeakel of the U.S. District Court for the Western District of Texas has granted a default judgment and permanent injunction against Steynberg and MTI.
However, the agency admitted that “orders requiring the payment of funds to victims may not result in restitution of lost money because violators may not have sufficient funds or assets.”
CFTC Cracks International Regime
The CFTC first charged Steynberg and his company in the summer of 2022.
According to the order, Steynberg engaged in an international fraudulent multilevel marketing (MLM) system to solicit Bitcoin from the public to participate in an unregistered commodity pool operated by MTI, a South Africa-based company.
From approx. May 2018 to approx. March 2021, Steynberg, as the controlling person of MTI, and the company falsely claimed to trade off-exchange retail currency through a proprietary “bot” or software.
“Either directly or indirectly, the defendants have misappropriated all Bitcoin they accepted from pool participants,” the final judgment order states.
The CFTC found that Steynberg, individually and as principal and agent of MTI, accepted at least 29,421 Bitcoins, valued at over $1.7 billion at the end of March 2021, from at least 23,000 individuals in the United States and worldwide, to participate in commodity pool without being registered as a commodity pool operator (CPO), as required by law.
Steynberg has been held in Brazil on an Interpol warrant since December 2021 and remains on the run from South African authorities, according to the announcement.
In addition to the charges against him by the CFTC, Steynberg is also permanently barred from registering with the CFTC or trading in CFTC-regulated markets.
This means that Steynberg will not be able to operate in any capacity involving the trading of commodity futures, options or swaps, or engage in retail foreign exchange trading, among other activities subject to CFTC oversight.
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