The federal Commodity Futures Trading Commission on Thursday (June 30) filed a civil enforcement action in the U.S. District Court alleging Cornelius Johannes Steynberg of Stellenbosch, Western Cape, Republic of South Africa, and his company, Mirror Trading International Proprietary Limited (MTI), with perpetrating a $1.7 billion bitcoin fraud
The agency stated in its announcement that the case is its largest cryptocurrency enforcement action to date.
Steynberg, according to the agency, is a fugitive from South Africa and was recently arrested by Interpol in Brazil.
The complaint alleges that for about three years ending in March 2021, Steynberg and MTI ran a multilevel marketing operation — a Ponzi scheme — using websites and social media to solicit bitcoin from the public with assurance funds would be used in a commodity pool.
The news release stated that the complaint alleged: “The commodity pool was controlled by MTI and Steynberg and purportedly traded off-exchange, retail foreign currency on a leveraged, margined and/or financed basis with participants who were not eligible contract participants through what the defendants falsely claimed was a proprietary ‘bot’ or software program. … The defendants misappropriated, either directly or indirectly, all of the bitcoin they accepted from the pool participants.”
More than 23,000 victims around the world sent bitcoin that totaled as of late March over $1.7 billion in value, the government alleged.
In reality, the complaint filed by the government stated
: Steynberg and MTI misappropriated pool funds, no trading bot existed, no profitable trading occurred and documents presented as account statements “were actually simulated trades from ‘demo’ accounts created via demo account for a trading platform.”
And in what is the key sign of a Ponzi scheme, the CFTC alleged Steynberg sent some participants funds he described as investment returns when in fact they were merely funds sent to be invested by other participants.