A South African CEO has been ordered to pay a record $3.4 billion penalty in a CFTC Bitcoin fraud case. The CEO was found guilty of committing fraudulent activities related to Bitcoin trading and misappropriating funds. This penalty is the largest ever imposed by the CFTC in a fraud case, emphasizing the agency’s commitment to protecting investors from fraudulent activities in the digital currency space. The case serves as a warning to other crypto traders that illegal activities will not be tolerated and that severe penalties will be imposed.
South African CEO Ordered to Pay Over $3 Billion in Bitcoin Fraud Case
A South African fugitive who operated an unregistered commodity pool to scam individuals of foreign exchange and bitcoin has been ordered by a US judge to pay over $3 billion in restitution and civil monetary penalty. This judgment is the largest monetary penalty ever recorded in a bitcoin-related CFTC fraud case.
The defendant, Cornelius Johannes Steynberg, founder and CEO of South African company Mirror Trading International Proprietary Limited or MIT, ran a fraudulent multi-level marketing (MLM) business model between 2018 and 2021 to solicit bitcoin from individuals to participate in a commodity pool. However, he failed to register the commodity pool with the CFTC as a commodity pool operator (CPO).
Steynberg was able to receive 29,421 BTC from around 23,000 US individuals and worth $1.7 billion globally in March 2021, but the CEO misappropriated the funds. The recent court order by Judge Lee Yeakel is based on a complaint filed against Steynberg in July 2022. Steynberg is set to pay a penalty of over $3.4 billion shared equally, with $1.73 billion for restitution to defrauded victims and $1.73 billion to be paid as a civil monetary penalty.
This case marks the largest fraudulent scheme involving bitcoin charged in any CFTC case, and the highest civil monetary penalty ordered in any CFTC case. Steynberg is permanently enjoined from engaging in any conduct that violates the Commodity Exchange Act (CEA) and cannot register or trade in any CFTC-regulated markets.
The CFTC is taking a strong stance against fraudulent schemes involving cryptocurrency. Recently, they filed lawsuits against an ex-Deutsche Bank Investment employee who set up a fraudulent crypto trading fund to collect bitcoin, ether, and fiat from investors, and against cryptocurrency exchange giant Binance and its CEO, Changpeng Zhao, for soliciting US customers in violation of federal laws.
In conclusion, it is essential to conduct proper due diligence when investing, especially when it comes to cryptocurrency. Individuals should be aware of the potential risks and conduct thorough research before making any investment decisions.