CFTC brings $1.7B fraud case involving Bitcoin against South African national

The United States Commodity Futures Trading Commission (or CFTC) has taken enforcement action against a South African national for what it called its “largest fraudulent scheme involving Bitcoin.”

The CFTC announced Thursday that it had filed a civil enforcement case in federal court against Cornelius Johannes Steynberg for fraud and other registration violations. According to South African law, the South African national created and managed a global currency commodity pool that was worth more than $1.7 Billion. Participants could only pay with Bitcoin (BTC).

According to the CFTC, Steynberg solicited BTC via social media and other websites using the South African-based company Mirror Trading International Proprietary Limited. The regulatory body stated that Steynberg accepted at least 29,421 BTC from May 2018 to March 2021. This was a total of more than $1.7Billion at the time and roughly $564M at the time.

The CFTC stated that the defendants “misappropriated, either directly, or indirectly”, all Bitcoin received from pool participants. The CFTC seeks full restitution for defrauded investors, disgorgement ill-gotten gain, civil monetary penalties and permanent registration and trading bans. It also seeks a permanent injunction to prevent future violations of the Commodity Exchange Act (CFTC Regulations).

ENFORCEMENT NEWS: CFTC Charges South African Pool Operator & CEO With $1.7 Billion Fraud in Bitcoin. https://t.co/cvNlksPznw
— CFTC (@CFTC) June 30, 2022

Related: Bitcoin ETFs are disappointed by the CFTC’s actions against Gemini

Steynberg’s case is just one of a number of enforcement actions that the CFTC has taken to stop individuals using cryptocurrencies for illegal purposes or firms trading digital assets in violation of the Commodity Exchange Act. The CFTC sued Gemini in June alleging that the cryptocurrency exchange made misleading statements to regulators in 2017. In October 2020, the CFTC filed a lawsuit against Gemini. The suit claimed that BitMEX’s founders made false or misleading statements to the regulator. A federal court ordered BitMEX’s founders $30 million in penalties.

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https://cointelegraph.com/news/cftc-brings-1-7b-fraud-case-involving-bitcoin-against-south-african-national