CFTC Charges Mirror Trading International with $1.7B Fraud, The Largest So Far for the Regulator
- CFTC noted that over 23,000 US residents sent 29,421 BTC to the club’s CEO, Cornelius Johannes Steynberg, during the period the scheme was running.
Today, the United States CFTC has charged a popular bitcoin club with a $1.7 billion fraud. The club, known as mirror trading international (MTI), is based in South Africa. CFTC alleged that MTI was running a fake multilevel marketing scheme.
The club earned lots of bitcoin through the scheme, but its CEO mismanaged the coins. The regulator adds that this case is its largest bitcoin-related fraud case. The regulator further said over 23,000 US residents sent 29,421 BTC to the club’s CEO, Cornelius Johannes Steynberg, during the period the scheme was running.
The regulator estimated that Steynberg may have received more than BTC mentioned above since he also received funds from residents of other nations. However, the MTI CEO didn’t have the license to run such a pool scheme.
CFTC Files Allegations Against Steynberg
According to the charging documents, those who sent their BTC to the club thought their investment was in a high-tech investment club through which they could increase their bitcoin holdings. MTI’s offer was for investors to earn a 10 percent return in 30 days. A return the company considered as passive income.
MTI also offered bonuses to investors who refer their loved ones and colleagues. However, the CFTC states that MTI’s offers were all lies.
The CFTC accused Steynberg of displaying fake account statements claiming to invest their BTC profitably. Also, the MTI CEO didn’t provide adequate disclosures. He lied that he had a trading bot, but the truth is, he had never made profits from trading the forex market.
After declaring bankruptcy early last year, the bitcoin club was liquidated in South Africa later that year. Steynberg ran his bitcoin commodity pool scheme for three years (May 2018 to early 2021). Following the club’s declaration of bankruptcy, many investors prevailed on regulators to investigate the company.
Hence, South Africa’s main regulator (the Financial Services Conduct Authority) and us law enforcement agents started their investigation dating back in 2020. Court filings show that the club’s CEO is wanted in several countries over various crimes.
The CFTC said an Interpol warrant caused his detention in Brazil recently. However, Steynberg is a South African resident. MTI and its lawyers are yet to respond to the media’s requests for comments.
Also, the club hasn’t yet issued an official statement regarding the matter. The company’s last message to investors in December 2020 was that Steynberg is on the run with investors’ funds. Also, other management executives are already cooperating with law enforcement agents regarding the funds’ misappropriation by Steynberg. Cases of crypto investment fraud are a recurring issue that seems to be increasing daily.