CFTC fines South African CEO $3.4B over Bitcoin MLM scheme

The U.S. Commodity Futures Trading Commission (CFTC) has fined a South African CEO $3.4 billion over a bitcoin MLM scheme. The CFTC alleged that the CEO and his company operated a fraudulent scheme that involved offering investors the opportunity to invest in bitcoin trading products. However, the money collected from investors was allegedly used to pay existing investors and line the CEO’s pockets, while little to no actual bitcoin trading occurred. This large fine serves as a warning to others who may be tempted to engage in similar fraudulent activities surrounding cryptocurrencies.

A South African CEO was recently hit with a $3.4 billion fine by the US Commodity Futures Trading Commission (CFTC) over a Bitcoin MLM scheme. Cornelius Johannes Steynberg, founder and CEO of Mirror Trading International Proprietary Limited (MTI), engaged in an international multi-level marketing scheme which solicited Bitcoin investments from the public. Promising investors the opportunity to participate in a commodity pool, Steynberg and MTI’s commodity pool was unregistered, and falsely portrayed the pool’s trading activity as bot-operated when, in fact, they traded off-exchange retail forex. Ultimately, Steynberg and MTI misappropriated all of their investors’ Bitcoin.

Starting in May 2018, Steynberg solicited funds from more than 23,000 individuals globally, obtaining nearly 30,000 BTC in total, which was worth $1.7 billion when the scheme concluded in March 2021. The CFTC announced a fine of $3.4 billion against Steynberg, the highest civil monetary penalty ever imposed by the agency, with half of that amount going towards providing restitution to victims, and the other half toward a civil penalty. Steynberg is also enjoined from registering with the CFTC, participating in CFTC-regulated markets, and engaging in activity that violates commodity rules.

While Steynberg has been held in Brazil on an INTERPOL arrest warrant since December 2021 and is still a fugitive from South African authorities, the CFTC previously charged Steynberg’s company directly in 2022. The agency has also taken action against numerous other crypto-related groups and individuals in recent months, including a Mango Markets hacker and OokiDAO’s founders. Notably, the CFTC announced charges against the major cryptocurrency exchange Binance and a number of its executives in March.

In conclusion, the CFTC’s court judgement against Steynberg highlights the importance of regulatory compliance and transparency in the digital currency market. As the market continues to grow and regulators closely monitor its developments, it is crucial for investors to do their due diligence and thoroughly vet any scheme or investment opportunity they are considering.

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