The CFTC claimed that the firm had proprietary software that was expected to recognize significant trading gains for investors who contributed to the Bitcoin pool, but in reality, there was no such “bot” in use.
The head of a South African firm has been slapped with a massive fine of $3.4 billion by a federal judge in Texas. The US commodities regulator claimed that this was the largest-ever fraud case revolving around Bitcoin ever to be committed by a company.
The head, who goes by the name Cornelius Johannes Steynberg, was asked to pay $1.7 billion as a civil penalty, a record for any Commodity Futures Trading Commission case, according to the regulator. Steynberg, whose last known place of residing was in South Africa, hasn’t been responsive to the media.
Details of This Bitcoin Fraud
The CFTC had reprimanded Steynberg in July, claiming that the Mirror Trading demanded Bitcoin online from thousands of people to allegedly manage a commodity pool. The company also promised to trade off-exchange, retail foreign currency with users who were not allowed to trade. The Commodity Futures Trading Commission filed charges against Mirror Trading International Proprietary Limited.
Steynberg, who had been a fugitive from South African Law enforcement, was detained in Brazil last year on an INTERPOL arrest warrant.
Over a span of almost three years from 2018 to 2021, Steynberg received and stole at least 29,421 bitcoins worth more than $1.7 billion from over 23000 participants from the United States. The people of Texas were the worst affected by the heist that happened almost two years ago.
The judgment against Steynberg was rolled out by Judge Lee Yeakel in the Western District of Texas.
The CFTC claimed that the firm had proprietary software that was expected to recognize significant trading gains for investors who contributed to the Bitcoin pool, but in reality, there was no such “bot” in use. In reality, only a small portion of the pooled Bitcoin was invested, and that too at a loss. The remaining was “misappropriated”, according to the CFTC. The firm ended up filing for bankruptcy in 2021, closely after which South African regulatory official began its fraud investigation.
MTI is presently undergoing liquidation in South Africa. The order states that MTI is “liable for fraud in connection with retail foreign currency (forex) transactions, fraud by an associated person of a commodity pool operator (CPO), registration violations, and failure to comply with CPO regulations”.
In addition to the fine, Steynberg is permanently denied registering with the CFTC and trading in any markets regulated by them.
Sanaa is a chemistry major and a Blockchain enthusiast. As a science student, her research skills enable her to understand the intricacies of Financial Markets. She believes that Blockchain technology has the potential to revolutionize every industry in the world.