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South African Based Company Charged With Record $1.7B Bitcoin Fraud By CFTC

U.S. commodities regulator CFTC announced on Thursday, June 30th, that it had filed civil charges against Cornelius Johannes Steynberg, the CEO of South African-based company MTI, for operating a fraudulent commodity pool worth over $1.7 billion in bitcoin.

The CFTC’s View On The Case

The CFTC, which stands for The Commodity Futures Trading Commission, stated that the fraudulent scheme – in which the business reportedly offered thousands of people the opportunity to participate in a commodity pool managed by MTI, defrauding them of bitcoin to the sum of 29,421 – is the largest it has ever prosecuted in relation to the cryptocurrency.

According to the CFTC’s report, MTI drew victims in with the promise of a unique software that would generate huge trade returns for investors that pooled their bitcoin with the company, but it has since been revealed that no such “bot” existed.

The CFTC added that MTI engaged in a scheme “to solicit accept, and pool more than $1.7 billion to trade off-exchange, retail foreign currency (forex) on a leveraged, margined, and financed basis.

The regulator alleges that, rather than trading forex, as MTI had indicated to traders, the corporation embezzled the pool’s funds, misrepresented trades and performances, falsified account statements, and employed a bogus broker to obscure the trades that took place.

Background on the Company and the Case

The defendants reportedly ran a worldwide, fraudulent, multilevel marketing enterprise, soliciting bitcoin from members of the public through numerous websites and social media platforms.

“At least 23,000 of the pool members were from the United States, the majority, if not all, of whom were not qualified contract participants,” The CTFC underlined in a statement. The firm eventually declared bankruptcy in 2021, prompting South African authorities to launch an inquiry into the potential fraud.

According to the case file, from May 18th, 2018, to March 30th, 2021, Steynberg, both individually and as a principal agent of MTI, accepted at least 29,421 Bitcoin—worth more than $1,733,838,372—from traders looking to participate in the commodity pool, despite lacking the necessary registration to act as an operator in the region. The defendants stole the entirety of the Bitcoin gathered from pool participants.

CFTCs Resolution

In its lawsuit, the CFTC pledges to seek “full restitution to defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against future violations of the ‘Commodity Exchange Act’ and CFTC Regulations.”

The CFTC has informed the affected victims that the restitution orders may not result in full monetary recovery due to the fact that the illicit actors may lack adequate finances and assets.

Steynberg had been on the run from South African authorities, but was recently apprehended in Brazil on an INTERPOL arrest warrant, according to the CFTC. Steynberg was unreachable for comment.

 

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This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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