Largest Bitcoin Fraud Scheme Results in $3.4B Penalty in a Case Brought by CFTC
A judge has ordered a record-breaking $3.4 billion penalty in a fraud case involving Bitcoin brought by the US Commodity Futures Trading Commission.
In a Thursday press release, the CFTC revealed that Cornelius Johannes Steynberg, a South African national and CEO of Mirror Trading International Proprietary Limited (MTI), has been ordered to pay the penalty for his role in a fraudulent commodity pool scheme that involved foreign currency transactions and Bitcoin.
The scheme involved an international multilevel marketing strategy that enticed people to donate Bitcoin to gain membership to an unregistered commodity pool.
Judge Lee Yeakel ordered Steynberg to pay $1.73 billion in restitution and a further $1.73 billion civil monetary penalty.
The CFTC said this is the "largest fraudulent scheme involving Bitcoin" charged in any CFTC case and the "highest civil monetary penalty ordered in any CFTC case."
From May 2018 to March 2021, Steynberg accepted 29,421 BTC from 23,000 people in the US and abroad. The BTC stash was worth more than $1.7 billion at the time but is currently worth approximately $867 million.
The CFTC discovered that Steynberg misappropriated all the Bitcoin he had collected from pool participants.
Steynberg has been found liable for fraud in connection with retail foreign currency transactions, registration violations, fraud by an associated person of a commodity pool operator, and failure to comply with commodity pool operator (CPO) regulations.
Additionally, Steynberg's involvement with the Commodity Exchange Act has resulted in a permanent ban on his participation in any conduct violating the act. He is also permanently banned from trading in any CFTC-regulated markets or registering with the CFTC.
The CFTC
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