US charges South African firm, CEO with $1.7 bn Bitcoin fraud

Washington, July 1

The US Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against a South African company and its CEO for running a fraudulent commodity pool worth over $1.7 billion in Bitcoin -- the largest fraudulent scheme involving Bitcoin charged in any CFTC case -- from thousands of people including 23,000 Americans.

The case, filed in the US District Court for the Western District of Texas, charged Cornelius Johannes Steynberg of Stellenbosch, Western Cape, Republic of South Africa and Mirror Trading International Proprietary Limited (MTI) with fraud and registration violations.

Steynberg created and operated, through MTI, a global foreign currency commodity pool that only accepted Bitcoin to purchase a participation in the pool, with a value of over $1,733,838,372, the CFTC said in a statement late on Thursday.

"The 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 commission said in a statement.

The CFTC cautioned victims that restitution orders may not result in the recovery of money lost, "because the wrongdoers may not have sufficient funds or assets".

From May 18, 2018 till March 30, 2021, Steynberg engaged in an international fraudulent multilevel marketing scheme, in addition to social media, to solicit Bitcoin from members of the public for participation in a commodity pool operated by MTI.

During this period, Steynberg accepted at least 29,421 Bitcoin - with a value of over $1,733,838,372 at the end of the period, to participate in the commodity pool without being registered as a commodity pool operator as required.

"The defendants misappropriated, either directly or indirectly, all of the Bitcoin they accepted from the pool participants," the agency said.