The top U.S. commodities watchdog charged South Africa-based bitcoin pool operator Mirror Trading International with $1.7 billion fraud on Thursday, alleging the global, multilevel marketing scheme “misappropriated” all of the bitcoin it amassed.
The Commodity Futures Trading Commission (CFTC) described the case as its “largest ever fraud scheme case involving bitcoin.” It alleged MTI’s key figure, Cornelius Johannes Steynberg, accepted 29,421 BTC from 23,000 Americans “and even more throughout the world” for a commodity pool scheme he wasn't licensed to run.
Victims of the scheme believed they were investing their bitcoin in a high-tech investment club “to grow your bitcoin,” charging documents said, citing MTI’s statements. Steynberg allegedly said MTI’s algorithms created “passive income” with 10% returns a month. Referring friends and family yielded a bonus, the documents said.
The reality of MTI was less savory, the CFTC alleged.
Steynberg failed to make proper disclosures, lied about the existence of a “trading bot,” never made a profitable forex swap and provided clients with phony account statements, the regulator said.
His alleged scheme ran from May 2018 until early 2021 when MTI entered bankruptcy proceedings and liquidation in South Africa. It faced mounting regulatory pressure in the U.S. and in South Africa beginning in 2020.
Steynberg himself is an international fugitive, court filings said. His residence is in South Africa, but he was “recently detained” in Brazil on an Interpol warrant, according to the CFTC.
MTI and its lawyers weren't immediately available for comment
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