- This is the largest Bitcoin-related fraud case the CFTC has ever resolved.
- The case centers on the CEO of Mirror Trading International Proprietary Limited (MTI).
- Half of the $3.4 billion penalty will be allocated to restitution for victims of MTI’s fraud.
A Texas court has ordered Johannes Steynberg, the CEO of Mirror Trading International Proprietary Limited (MTI), to pay a $3.4 billion penalty in connection with a large-scale fraud involving Bitcoin.
According to the Commodity Futures Trading Commission (CFTC), Steynberg ran an international, fraudulent multilevel marketing (MLM) scheme that solicited bitcoins from the public to fund an unregistered commodity pool operated by MTI, a company based in South Africa.
The CFTC alleges that, from May 2018 through about March 2021, Steynberg—who controlled MTI—falsely claimed the company traded off-exchange retail forex using a proprietary “bot” or software program.
The final judgment states:
“Either directly or indirectly, the defendants misappropriated all of the Bitcoin they accepted from pool participants.”
Authorities say Steynberg, both individually and as MTI’s principal and agent, accepted at least 29,421 bitcoins, valued at more than $1.7 billion at the time. Those bitcoins came from at least 23,000 individuals across the United States and other countries. Investors were induced to join a commodity pool even though MTI was not registered as a commodity pool operator (CPO), as required by law.
Steynberg arrest
Steynberg was arrested in December 2021 and has been held in Brazil under an Interpol arrest warrant since that time.
In addition to the civil monetary judgment, Steynberg is permanently barred from registering with the CFTC and from trading in any markets regulated by the agency.
Restituting MTI’s victims
Half of the $3.4 billion penalty will be directed to restitution for MTI’s victims. The remaining half is a civil penalty—the largest civil monetary penalty ever ordered in a CFTC action.
The CFTC noted that even when orders require payment to victims, those orders do not guarantee full recovery of losses because wrongdoers may lack sufficient funds or assets to satisfy restitution orders.