CFTC Throws Criminal Charges at CEO of South African Bitcoin Trading Firm, Imposes $3.4 Billion Fine

• A Texas court has ordered the president of a South African crypto company to pay a record-breaking $3.4 billion for orchestrating a Bitcoin fraud.
• The commodity regulator brought charges against the company last year and called it the largest fraud case in history.
• In June 2022, the CFTC filed a civil lawsuit against Steynberg and his company, Mirror Trading International.

A Texas court has ordered the president of South African Mirror Trading firm, who orchestrated a Bitcoin fraud, to pay a record-breaking $3.4 billion in damages as a result of a lawsuit filed by the CFTC.

The commodity regulator brought charges against the company last year and called it the largest fraud case in history.

Details of the Decision Against the African Bitcoin Company

The federal court ordered Cornelius Johannes Steynberg to pay $1.7 billion in compensation to defrauded victims. Another $1.7 billion was imposed as a civil penalty. The Commodity Futures Trading Commission (CFTC) stated that this penalty is the highest civil monetary penalty ever imposed in any commodity case.

In June 2022, the CFTC filed a civil lawsuit against Steynberg and his company, Mirror Trading International. The allegations were that they operated a fake Bitcoin commodity pool worth $1.7 billion.

Based on the order, the CFTC stated that the defendants were responsible for “fraud involving retail foreign exchange (forex) transactions, fraud by an associated person of a commodity pool operator (CPO), record-keeping violations, and CPO regulation violations.”

Steynberg was dubbed a South African fugitive, but was arrested in Brazil that year on an INTERPOL arrest warrant. Meanwhile, Mirror Trading International is said to have been liquidated.

According to the regulator’s lawsuit, Steynberg, who ran Mirror Trading International, was alleged to have been involved in an international fake multi-level marketing scheme.

The lawsuit details activities between May 2018 and March 2022. The scheme was said to have solicited public participation for an unregistered commodity pool. The order states that Steynberg accepted at least 29,421 Bitcoin from at least 23,000 people worldwide. The CFTC alleges that the defendants misappropriated all Bitcoin received from pool participants, directly or indirectly. Additionally, the commodity pool was not registered as a CPO as required.

Steynberg claimed that MTI conducted retail forex trades off-exchange through a proprietary software program or “bot,” but the order claims that this claim is misleading.

CFTC Moving Towards Crypto and Bitcoin Compliance

The CFTC has taken several compliance actions in the crypto space. In March, the regulator filed a complaint against the largest crypto exchange, Binance, and top executives. The case mentions co-founder Changpeng Zhao and former chief compliance officer Samuel Lim. Binance is alleged to have actively targeted US users with insider trading and know-your-customer (KYC) norm violations.

In a recent talk, former CFTC Chairman Chris Giancarlo said that officials can successfully interact with cryptos.

The former commodity chief said, “We are still the guardians of a very old system.”