On September 6, Judge David A. Ezra issued a consent order against Mirror Trading International (MTI), the Commodity Futures Trading Commission (CFTC) announced the following day.
The court found MTI guilty of forex fraud, commodity pool operator fraud, registration violations, and regulatory non-compliance. The case has gained notoriety as South Africa’s biggest-ever pyramid scheme.
Mirror Trading International Will Pay a Record Civil Monetary Penalty
The judge’s September 7 consent order, a court-approved agreement between two disputing parties, brings the long-running case to its conclusion.
Back on April 24, the Western District of Texas US District Court issued a default judgment against Cornelius Johannes Steynberg, MTI’s founder and CEO. Both orders stem from a CFTC complaint filed on June 30, 2022.
Authorities accused the business and its CEO, Cornelius Johannes Steynberg, of large-scale fraud involving Bitcoin. MTI operated a scam commodity pool that promised victims significant gains for pooling their assets.
The fraud managed to ensnare at least 23,000 victims, according to the CFTC. In total, MIT collected over 29,421 BTC, worth over $760 million at today’s prices.
However, at the end of the relevant period, the cryptocurrency was worth even more: a whopping $1.7 billion. Unfortunately, the defendants misappropriated every single bitcoin (BTC) that they accepted from the pool participants.
As a result, Judge Ezra has ordered MTI and Steynberg to pay over $1.7 billion in restitution to the victims. The penalty is the highest civil monetary penalty ordered by the CFTC.
Legitimate commodity pools operate like a group investment fund where individuals agree to gather their assets for financial gain. In the case of MTI, victims were promised huge wins with a trading bot that would make investments on their behalf. However, the trading bot did not exist.
Did you know your Bitcoin transactions aren’t actually anonymous? Anonymity vs. Pseudonymity: Understanding the Key Differences
Criminals Often Chose Bitcoin for Its Pseudonymity
“The fraudsters made the most modern of promises, claiming their ‘Advanced Intelligence Software with Bitcoin as the base currency’ would create untold wealth for investors, but were actually committing a classic form of fraud, a multilevel marketing scam,” said CFTC Director of Enforcement Ian McGinley.
Criminals often favor cryptocurrencies like Bitcoin. They exploit its pseudonymity, which allows them to conduct transactions without directly revealing their true identities. This can make it easier to hide ill-gotten gains.
Unlike complete anonymity, where actions are untraceable, pseudonymity links transactions to a digital alias. However, this digital alias can in some cases be traced back to the individual with enough data and effort.
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