CFTC Fined South African CEO $3.4 Billion Over Bitcoin MLM Scheme

The US Commodity Futures Trading Commission (CFTC) said on April 27th It has secured a court ruling against a CEO involved in bitcoin fraud.

Shared CEO of Bitcoin MLM

The case in question concerned Cornelius Johannes Steinberg from South Africa, who was the founder and CEO of Mirror Trading International Proprietary Limited (MTI).

Steynberg participated in an international multi-level marketing (MLM) scheme in which he solicited Bitcoin investment from the public.

Steynberg and his company promised investors the opportunity to participate in the commodity pool. Not only was this commodity pool unregistered, but Steynberg and MTI portrayed the pool’s trading activity as a functioning bot when in reality they were trading OTC retail forex. Ultimately, the two editors embezzled all of their investors’ bitcoins.

Steynberg started the MLM scheme in May 2018 and solicited funds from more than 23,000 individuals in the United States and globally. He earned nearly 30,000 BTC in total, a sum worth $1.7 billion when the scheme ended in March 2021.

Steynberg faces the CFTC’s largest civil fine ever

The CFTC said it would fine Steynberg $3.4 billion. Half of this amount will go towards providing compensation to the victims, while the other half will go towards civil punishment.

The above sum is the CFTC’s highest civil financial penalty, and the case itself is the agency’s largest Bitcoin fraud case to date.

Steynberg is also prohibited (or forbidden) from registering with the CFTC, participating in CFTC-regulated markets, and engaging in activity that violates the commodity rules. Today’s announcement said Steinberg has been held in Brazil under an Interpol arrest warrant since December 2021, and remains a fugitive from South African authorities.

The CFTC previously acquired Steynberg directly in 2022. The agency has also taken action against several other crypto-related groups and individuals in recent months, including A Mango Markets hacker And OokiDAO founders.

Notably, the CFTC announced charges against the major cryptocurrency exchange binance and a number of its executives in March.

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