CFTC Handles Bitcoin-Related Fraud Schemes Worth $1.7 Billon

A U.S. federal regulatory agency, the Commodity Futures Trading Commission or CFTC, has charged a South African citizen with fraud and registration violations in excess of $2 billion in BTC.

Fraudulent scheme nets $1.7 billion in Bitcoin

According to a press release issued Thursday, June 30, 2022, the CFTC filed a civil enforcement suit against Cornelius Johannes Steynberg as well as Mirror Trading International Proprietary Limited. (MTI), before the U.S. District Court of the Western District of Texas.

American regulator claims that Steynberg was involved in a multilevel fraud scheme to market MTI between May 2018 and March 2021.

According to the CFTC’s complaint, the South African solicited bitcoin from individuals via social media and different websites to participate in a commodity pool operated by MTI. However, the regulator stated that investors were not eligible contract participants.

Steynberg subsequently received a minimum of 29,421 BTC within the period, valued at over $1.73 billion at the time (now worth $598 million at bitcoin’s current price). Only 23,000 participants were from the United States. MTI did not register with CFTC.

Meanwhile, the regulator described the case as “the largest fraudulent scheme involving Bitcoin charged in any CFTC case.” In a separate press release, CFTC Commissioner Kristin Johnson said:

“Instead of trading forex as represented, Defendants misappropriated pool funds, misrepresented their trading and performance, provided fictitious account statements as well as created a fictitious broker at which trading purportedly took place, and in general operated the pool as a Ponzi scheme.”

CFTC Seeks to Become Crypto’s Chief Regulator

Steynberg is currently a fugitive in South Africa, but was captured recently in Brazil pursuant to an INTERPOL arrest warrant.

According to a press release, the following statement was made:

“CFTC seeks full restitution to defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against future violations of the Commodity Exchange Act and CFTC Regulations.”

The federal regulator cautioned that victims may not receive their money back, as defendants might not have sufficient assets or funds to repay.

This case comes a month following the CFTC’s indictment of two individuals who ran a fraud scheme that defrauded investors worth $44 million. The defendants also managed a commodity pool which was not registered with CFTC.

According to a recent report, the CFTC is looking to become the primary regulatory body for the cryptocurrency industry.

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