Record-Breaking $3.4 Billion Penalty in Largest Bitcoin Fraud Case by the CFTC

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In a groundbreaking legal decision, a United States judge has imposed a staggering $3.4 billion penalty in a lawsuit initiated by a U.S. financial regulator targeting a fraudulent Bitcoin scheme. The case marks the largest-ever fraudulent Bitcoin operation charged in any Commodity Futures Trading Commission (CFTC) case and the highest civil monetary penalty ever ordered.

Texas Court Orders Massive Fine for Bitcoin Fraud Perpetrator

On April 27, Texas District Court Judge Lee Yeakel instructed Cornelius Johannes Steynberg, a South African national and CEO of Mirror Trading International Proprietary Limited (MTI), to pay the hefty sum for his involvement in a deceptive commodity pool scheme concerning foreign currency transactions and Bitcoin. MTI is a company that falsely claims to specialize in trading and networking. In essence, it is a Bitcoin fraud scheme waiting to unravel.

As a result of the ruling, Steynberg is required to pay $1.73 billion in restitution to the defrauded victims. In addition, he will also pay an additional $1.73 billion civil monetary penalty. The CFTC emphasizes that this is the most significant penalty ever imposed in their cases.

Steynberg, as the head of MTI, orchestrated an international fraudulent multilevel marketing scheme to solicit Bitcoin from the public for participation in an unregistered commodity pool. By March 2021, the value of this unregistered pool exceeded $1.7 billion. 

Between May 2018 and March 2021, Steynberg accepted at least 29,421 BTC, valued at over $1.7 billion. These funds came from 23,000 individuals in the U.S. and countless others worldwide. According to the CFTC, Steynberg misappropriated all the Bitcoin obtained from pool participants.

Steynberg Found Liable for Multiple Violations

The April 27 order found Steynberg liable for fraud in connection with retail foreign currency transactions, fraud by an associated person of a commodity pool operator (CPO), registration violations, and failure to comply with CPO regulations. 

Consequently, Steynberg is permanently prohibited from engaging in conduct that violates the Commodity Exchange Act (CEA). In addition, he is permanently banned from registering with the CFTC or trading in any CFTC-regulated markets.

On June 30, 2022, the CFTC filed a civil enforcement action in federal court against Steynberg for fraud and registration violations.

Steynberg’s Current Status

Initially, Steynberg evaded South African law enforcement and became a fugitive. However, since December 2021, he has been detained in Brazil on an INTERPOL arrest warrant.

This historic ruling sends a strong message to those seeking to defraud innocent investors using cryptocurrency schemes.

The CFTC’s swift and decisive action serves as a testament to the regulator’s commitment to protecting consumers and ensuring the integrity of financial markets.

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