CTFC wins record $3.4 billion fee in Bitcoin-related fraud case
A record $3.4 billion penalty has been handed down by a judge in a lawsuit brought by a US financial regulator involving a fraudulent scheme involving Bitcoin (BTC).
An April 27 statement from the Commodity Futures Trading Commission (CFTC) said Texas District Court Judge Lee Yeakel ordered Cornelius Johannes Steynberg to pay the fine for his role in running a fraudulent commodity pooling scheme involving foreign exchange transactions and Bitcoin.
Steynberg, a South African citizen and CEO of Mirror Trading International Proprietary Limited (MTI), an alleged trading and networking company, was ordered to pay $1.73 billion in restitution to defrauded victims and an additional civil monetary penalty of 1 .73 billion dollars.
The CFTC said it is the “highest civil monetary penalty ordered in any CFTC case” and also “the largest fraudulent scheme involving Bitcoin charged in any CFTC case.”
The order explained that as head of MTI, Steynberg “participated in a multi-level international fraudulent marketing scheme to solicit Bitcoin from members of the public to participate in an unregistered commodity pool,” whose value totaled more than $1.7 billion as of March 2021.
From May 2018 to March 2021, the CFTC claimed he accepted at least 29,421 BTC worth more than $1.7 billion at the time – but currently worth approximately $867 million – from 23,000 individuals in the US and even more globally.
“Either directly or indirectly, the defendants misappropriated all Bitcoin they accepted from pool participants,” the CFTC wrote.
According to the April 27 order, Steynberg was found liable for retail foreign currency transaction fraud, fraud by an associated person of a commodity pool operator (CPO), registration violation and failure to comply with CPO regulations.
In addition, Steynberg is permanently prohibited from engaging in conduct that violates the Commodity Exchange Act (CEA). He is also permanently barred from registering with the CFTC or trading in CFTC-regulated markets.
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On June 30, 2022, the CFTC announced that it had filed a civil enforcement action in federal court for fraud and registration violations against Steynberg.
Steynberg initially fled South African law enforcement and is currently on the run, but has been detained in Brazil on an INTERPOL warrant since December 2021.
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