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Regulators in the United States have taken decisive action to address an enforcement case concerning the defunct Mirror Trading International (MTI).
The United States District Court for the Western District of Texas has mandated that MTI pay $1.7 billion in restitution to victims for running a fraudulent operation involving digital assets and forex, as announced by the Commodity Futures Trading Commission (CFTC) on Sept. 7.
The CFTC highlighted that MTI and its CEO, Cornelius Steynberg, were involved in an “international multi-level marketing scheme” that received nearly 30,000 Bitcoin (BTC) from at least 23,000 individuals in the United States. The announcement indicated that MTI and Steynberg promised access to an unregistered commodity pool in return for BTC contributions, which ultimately did not materialize.
“MTI misappropriated nearly all of the funds instead,” the CFTC stated, noting that the recent court ruling and restitution effectively wrap up a case initiated by the authority in June 2022.
As previously reported by Cointelegraph, MTI entered provisional liquidation in late 2020 after one of its directors allegedly fled the country with all the Bitcoin that investors had entrusted to the firm.
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In January 2021, MTI asserted it had over 260,000 members across 170 countries, with investors facing losses of approximately $1 billion at the time of liquidation. The MTI fraud is considered one of the largest Ponzi schemes involving digital assets.
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“I strongly encourage all members of the public to stay informed about potential scams and abuses in digital asset markets by visiting our investor advisory page,” CFTC Commissioner Kristin Johnson stated in the announcement. She added that the CFTC has initiated or resolved ten fraud cases related to digital assets or forex since June 2023, remarking:
“I commend the Division of Enforcement for remaining vigilant and sending a strong message to the market that the Commission will take necessary actions to safeguard its markets from fraud.”
This development coincides with CFTC Commissioner Caroline Pham advocating for a limited pilot program to tackle cryptocurrency regulation in the United States. On Sept. 7, the commissioner indicated her intention to propose a pilot program for digital asset markets, asserting that the U.S. may soon need to “play catch-up” to jurisdictions that are more crypto-friendly.
On the same day, another CFTC Commissioner, Summer Mersinger, expressed concerns regarding enforcement actions related to decentralized finance protocols. The commissioner contended that the CFTC should engage with the public and stakeholders rather than relying predominantly on enforcement measures.
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