The U.S. Commodity Futures Trading Commission (CFTC) has recently concluded a case against a South African company involved in crypto fraud. In an announcement made on September 7, the CFTC disclosed that a judge has entered a consent order against Mirror Trading International Proprietary Limited (MTI), holding the company accountable for various types of fraud. The CFTC further revealed that the order will include provisions for compensating the numerous victims affected by the company’s fraudulent activities.
According to the CFTC’s findings, MTI offered an investment opportunity that purportedly involved trading intelligence software utilizing Bitcoin as the base currency. However, the CFTC determined that the company, led by CEO Cornelius Johannes Steynberg, was actually running a multi-level marketing scheme. MTI solicited Bitcoin from investors, promising them the opportunity to participate in an unregistered commodity pool in return. Contrary to the company’s claims, the trading activity did not utilize proprietary software as advertised. Instead, MTI and its leader improperly misappropriated funds from pool participants, both directly and indirectly.
The CFTC alleges that MTI managed to convince investors to contribute a staggering total of 29,421 BTC, which was worth over $1.7 billion at one point. Around 23,000 individuals from the U.S. and thousands more globally fell victim to the scheme and provided funds to the company. The CFTC’s recent court decision mandates that MTI pay more than $1.7 billion in restitution to the investors affected by the fraud. Additionally, the court order enjoins MTI from violating the Commodity Exchange Act (CEA) and bans the company from trading in CFTC markets. It also imposes a registration ban on the firm.
In April, a default judgment was passed against MTI’s CEO, Cornelius Johannes Steynberg, requiring him to pay more than $1.7 billion in restitution, in addition to a civil monetary penalty exceeding $1.7 billion. However, it remains uncertain whether the restitution amount mandated for MTI affects Steynberg’s personal liabilities.
At present, MTI is in the process of liquidation, and its website is non-operational. There are indications that the company paid its employees using Bitcoin, although the CFTC did not provide any comment on this matter beyond the allegations of misappropriated funds.
The CFTC’s actions against Mirror Trading International shed light on the insidious nature of crypto fraud. It serves as a reminder to investors to exercise caution and conduct thorough due diligence before engaging in any investment opportunities. The restitution mandate placed on MTI emphasizes the importance of holding fraudulent actors accountable and offers hope for the affected victims. Moving forward, it is imperative for regulatory bodies to continue taking decisive action to protect investors and maintain the integrity of the cryptocurrency market.