Bitcoin Fraud Case Ends in Record $3.4 Billion Fine for Absconding CEO

By Bloomberg
Posted on 04/30/23 | News Source: Bloomberg

A U.S. judge ordered a South African executive to pay more than $3.4 billion in restitution and fines for a fraud scheme involving bitcoin – the highest-ever civil monetary penalty in any U.S. Commodity Futures Trading Commission case.

Cornelius Johannes Steynberg, the founder and chief executive of Mirror Trading International Proprietary, committed fraud tied to retail foreign-currency transactions, among other violations, the agency said in a statement that announced the order by U.S. District Judge Lee Yeakel.

The scam ensnared investors from the U.S. to Canada, Namibia and South Africa, where the Financial Sector Conduct Authority put MTI under provisional liquidation in December 2020. The hunt for the company’s CEO began in earnest when the management of MTI, which claimed to have 260,000 members, said in a letter posted on Telegram that they were misled and that Steynberg may have fled to Brazil.

Between 2018 and 2021, Steynberg took part in a global “fraudulent multilevel marketing scheme” to solicit bitcoin from people for participation in an unregistered commodity pool operated by Mirror Trading, according to the CFTC.

He solicited at least 29,421 bitcoin – worth more than $1.7 billion in March 2021 – from at least 23,000 individuals in the U.S. and more from around the world, for participation in an unregistered commodity pool that his company operated.

“Either directly or indirectly, the defendants misappropriated all of the bitcoin they accepted from pool participants,” CFTC said.