The Commodity Future Trading Commission (CFTC) has ordered an unregistered bitcoin (BTC) commodity pool operator to pay $3.4 billion, in the agency’s largest-ever fraud case involving BTC.
Cornelius Steynberg, the founder and CEO of the South African company Mirror Trading International Proprietary Limited, was found responsible for a number of offenses, such as handling retail forex transactions illegally, fraud by a connected party of a commodity pool operator, and registration infractions.
In order to trick people into contributing bitcoin to an unregistered commodity pool, the CFTC claims Steynberg concocted an international multi-level marketing scheme between May 2018 and March 2021.
Contrary to bitcoin mining pools, commodity pools are made up of privately contributed funds, in this case, bitcoin, that are intended to be traded on derivatives markets for profit. The CFTC, which views Bitcoin as a commodity rather than a security, requires pool operators to register.
Authorities assert that MTI and Steynberg jointly controlled the entire operation and are accused of engaging in off-exchange retail forex trading using a so-called proprietary bot without registering with regulators.
According to a lawsuit the CFTC filed in June 2022, he accepted a staggering 29,241 BTC ($1.7 billion at the time, or $858.5 million today) from more than 23,000 people in the US and other countries.
Steynberg boasted that the MTI pool, according to the CFTC, had never experienced a single trading loss day and that his trading bot could generate profits of 10% every single month, barring just one instance.
Additionally, the agency asserted that he might have subsisted on other people’s Bitcoin. “Either directly or indirectly, the defendants misappropriated all of the Bitcoin they accepted from pool participants,” it said.
Steynberg received the highest civil monetary fine ever imposed in a CFTC case because his enormous fines were equally divided between regulator fines and victim restitution. He might not have the money to make good, the regulator cautioned.
He has been given a lifetime ban from engaging in any actions that are against the Commodity Exchange Act. Additionally, Steynberg can’t register or trade in any CFTC-regulated markets.
Steynberg has been evading capture by South African authorities for some time, but he was apprehended in Brazil for using a false identity. He has been held there since December 2021, according to the CFTC, based on an Interpol arrest warrant.