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A historic penalty of $3.4 billion has been imposed by a Judge in a lawsuit initiated by a U.S. financial regulator concerning a fraudulent operation involving Bitcoin (BTC).
An announcement from the Commodity Futures Trading Commission (CFTC) on April 27 indicated that Texas District Court Judge Lee Yeakel mandated Cornelius Johannes Steynberg to pay this amount for his involvement in executing a deceptive commodity pool scheme related to foreign currency transactions and Bitcoin.
Steynberg, a national of South Africa and CEO of Mirror Trading International Proprietary Limited (MTI), a claimed trading and networking firm, was directed to pay $1.73 billion in restitution to the victims of the fraud, along with an additional $1.73 billion as a civil monetary penalty.
The CFTC stated that this represents the “highest civil monetary penalty imposed in any CFTC case” and is also “the largest fraudulent scheme involving Bitcoin charged in any CFTC case.”
Today, a federal court mandated a South African CEO to pay over $3.4 billion for forex fraud, marking this as the CFTC’s largest fraud scheme case involving bitcoin. Learn more: https://t.co/X2vmHIRLkh
— CFTC (@CFTC) April 27, 2023
The order detailed that as the leader of MTI, Steynberg “participated in an international fraudulent multilevel marketing scheme to solicit Bitcoin from the public for involvement in an unregistered commodity pool,” which had a total value exceeding $1.7 billion as of March 2021.
Between May 2018 and March 2021, the CFTC asserted that he accepted at least 29,421 BTC valued at over $1.7 billion at that time — but currently estimated to be around $867 million — from 23,000 individuals in the U.S. and even more worldwide.
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“Either directly or indirectly, the defendants misappropriated all of the Bitcoin they received from pool participants,” the CFTC stated.
According to the April 27 order, Steynberg was found liable for fraud related to retail foreign currency transactions, fraud by an associated individual of a commodity pool operator (CPO), registration infractions, and noncompliance with CPO regulations.
Furthermore, Steynberg is permanently barred from engaging in activities that contravene the Commodity Exchange Act (CEA). He is also permanently prohibited from registering with the CFTC or participating in any CFTC-regulated markets.
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On June 30, 2022, the CFTC revealed that it had initiated a civil enforcement action in federal court for fraud and registration violations against Steynberg.
Initially, Steynberg evaded South African law enforcement and is currently a fugitive but has been apprehended in Brazil on an INTERPOL arrest warrant since December 2021.
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