The Commodity Futures Trading Commission (CFTC) has resolved its largest fraud case involving bitcoin with a fine for the CEO of a defunct South African crypto trading firm.
The regulator said a United States District Court judge has ordered the founder and CEO of Mirror Trading International Proprietary Limited (MTI) to pay over $3.4 billion after engaging in an international fraudulent multilevel marketing scheme that solicited bitcoin from the public, according to a Thursday (April 27) press release.
The judge’s order includes over $1.7 billion in restitution to victims and over $1.7 billion in a civil monetary penalty, the release stated.
However, the CFTC said in the release that the orders may not result in the recovery of the money because the wrongdoers may not be able to pay.
The order also permanently prohibits the CEO — Cornelius Johannes Steynberg of Stellenbosch, West Cape, South Africa — from registering with the CFTC or trading in any markets regulated by the CFTC, the release said.
MTI is in liquidation in South Africa, and Steynberg has been detained in Brazil since December 2021 after fleeing from South African law enforcement, per the release.
The order found that Steynberg and MTI misappropriated 29,421 bitcoin — which was valued at over $1.7 billion at the end of March 2021 — that they had accepted from participants in their unregistered commodity pool with which they purportedly traded off-exchange, retail foreign exchange (FX), the release said.
“The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable,” the regulator said in the release.
This news comes about a month after Chainalysis reported that crypto crime hit an all-time high of $20.6 billion in 2022, up from $18 billion in 2018.
That is a “lower bound” estimate that is almost sure to be revised upward, Chainalysis Director of Research Kim Grauer told PYMNTS in an interview posted March 6.
Grauer said the rise was driven by sanctioned entities, while there was a decline in scams because of the bear market.
“The scammers may not have been making as much money as before, but they’re not going to give up … and we know that criminals are among the fastest to adapt and pivot,” Grauer said.
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