CFTC Bitcoin Fraud Case: South African CEO Ordered to Pay Record $3.4 Billion Penalty

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By Degen Lipsa

The CFTC claims that the Bitcoin fraud case is their biggest to yet.

Over $3 billion has been awarded in reparations and civil monetary penalties for a South African fugitive who used an unregulated commodity pool to defraud unwitting victims of foreign exchange and bitcoin.

The judgement represents the biggest monetary fine ever recorded in a CFTC bitcoin fraud case.

CFTC’s Biggest Bitcoin Fraudulent Case

According to a news statement from the Commodity Futures Trading Commission (CFTC), a US court in the Western District of Texas District Court ordered fugitive South African Cornelius Johannes Steynberg to pay a $3.4 billion fine in a case involving bitcoin fraud.

The CFTC said that between 2018 and 2021, Steynberg, the founder and CEO of the South African business Mirror Trading International Proprietary Limited, or MIT, used a sham multi-level marketing (MLM) business model to get people to contribute bitcoin to a commodity pool. The CEO and his business, however, operated the commodities pool without becoming a registered commodity pool operator (CPO) with the CFTC.

In March 2021, Steynberg received 29,421 BTC worth $1.7 billion from roughly 23,000 US citizens and more abroad, according to the press announcement, which claims that the CEO misused the money.

Based on a case brought against the South African CEO in July 2022, Judge Lee Yeakel issued the most recent court ruling. Steynberg must likewise pay a fine of more than $3.4 billion.

The remaining $1.73 billion will be paid as a civil monetary penalty, which the CFTC describes as the “highest civil monetary penalty ordered in any CFTC case,” adding that “this action is also the largest fraudulent scheme involving Bitcoin charged in any CFTC case.” Of the total amount, $1.73 billion will be paid as restitution to victims of fraud.

Banned From Engaging With the CFTC

The South African CEO “is permanently enjoined from engaging in conduct that violates the Commodity Exchange Act (CEA),” according to the news release. He also cannot register with the agency or trade in any markets under CFTC regulation. Steynberg, who was evading the law in his nation, has been detained in Brazil since the end of 2021 as a result of an INTERPOL arrest warrant.

As CryptoPotato previously reported, the CFTC has filed a case against an ex-Deutsche Bank Investment employee who set up a fictitious crypto trading fund to defraud investors of their bitcoin, ether, and fiat.

The regulatory body also brought legal action against the largest cryptocurrency exchange, Binance, and its CEO, Changpeng Zhao, for courting US consumers in violation of federal law.

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