Mirror Trading International ordered to pay $1.7 billion in restitution for crypto fraud

Mirror Trading International ordered to pay $1.7 billion in restitution for crypto fraud

Time Stamp: September 7, 2023 12:37 PM
Source Node: 2258127

Mirror Trading International, a South African Company trading and networking company that uses Bitcoin as its base currency, has been ordered by a U.S. Federal Court judge to pay $1.7 billion in restitution to victims over its involvement in a deceptive commodity pool scheme.

In an announcement on Thursday, the Commodity Futures Trading Commission (CFTC) said the settlement is a resolution to an enforcement case brought forth by the agency against Mirror Trading International Proprietary Limited (MTI) and its CEO, Cornelius Johannes Steynberg.

The news comes a few months after a federal court ordered the fugitive Mirror Trading International CEO to pay $3.4 billion in the largest-ever Bitcoin fraud case. As we reported back in April, the CFTC accused Cornelius Johannes Steynberg, the founder and CEO of Mirror Trading International Proprietary, of engaging in fraud related to retail foreign currency transactions, along with other violations.

“The settlement with MTI and default judgment against Steynberg represent the latest stage in our battle against fraudsters who victimized over 23,000 individuals from the U.S.,” stated Director of Enforcement Ian McGinley. “Here, the fraudsters made the most modern of promises, claiming their ‘Advanced Intelligence Software with Bitcoin as the base currency’ would create untold wealth for investors, but were actually committing a classic form of fraud, a multilevel marketing scam. Whether a scam involves fictitious electronic trading ‘bots’ or Bitcoins, as this action involving a South African entity shows, we will pursue the scam artists wherever they may be,” CFTC said in a news release.

In a June enforcement directive, the CFTC alleged that MTI engaged in online bitcoin solicitation from a multitude of individuals, with the promise of operating a commodity pool. The company asserted it possessed exclusive software capable of generating substantial trading profits for investors who entrusted their bitcoin to it. However, this claim of a functional “bot” was unfounded.

In reality, only a fraction of the pooled bitcoin was ever utilized, resulting in losses, while the majority of the funds were, as per the CFTC, “misappropriated.” In 2021, the company eventually filed for bankruptcy, prompting South African authorities to initiate a fraud inquiry shortly thereafter.

As per the order, spanning approximately May 2018 to around March 2021, Cornelius Johannes Steynberg, both in his individual capacity and as the figure in control of MTI, orchestrated an elaborate international scheme. This fraudulent multilevel marketing endeavor aimed to solicit Bitcoin from individuals, enticing them to partake in an unregistered commodity pool administered by MTI. This commodity pool, under the oversight of defendants MTI and Steynberg, allegedly engaged in off-exchange, retail forex trading, all purportedly facilitated by a fictitious proprietary “bot” or software program as falsely claimed by the defendants.

Throughout this timeframe, Steynberg, operating both independently and as the key figure representing MTI, accepted a minimum of 29,421 Bitcoin. This amounted to a value exceeding $1,733,838,372 at the conclusion of the relevant period. These Bitcoin contributions came from no less than 23,000 individuals in the United States, along with numerous others worldwide, all seeking participation in the commodity pool. Regrettably, the defendants misappropriated the entirety of the Bitcoin they obtained from the pool participants, either directly or indirectly.

Time Stamp:

More from TechStartups