Ponzi Scheme

CFTC charges South African man in $1.7B fraud scheme involving BTC

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The Commodity Futures Trading Commission (CFTC) has filed its biggest case involving BTC to date. The U.S. regulator brought charges against Cornelius Johannes Steynberg, chief executive officer of Mirror Trading International Proprietary Limited (MTI), over operating an international fraudulent multi-level marketing scheme.

In its press release, the CFTC said the South African solicited, accepted, and pooled more than $1.7 billion worth of BTC via various websites and social media. Around 23,000 participants of the scheme were from the United States and were not eligible contract participants, the CFTC said.

Steynberg and MTI were operating a Ponzi scheme while posing to be trading foreign exchange (forex) with the 29,421 BTC accepted from participants. They allegedly misappropriated all the pooled funds through a bogus broker they created and provided participants with fictitious account statements, authorities said.

“The CFTC’s complaint seeks full restitution on behalf of defrauded participants, as well as disgorgement, civil monetary penalties, permanent trading and registration bans, and other relief. Notably, this fraud represents the largest to date charged by the CFTC involving Bitcoin,” the press release read.

The enforcement action has been filed in the U.S. District Court for the Western District of Texas. CFTC Commissioner Kristin Johnson, who wrote the statement, also commended the Division of the Enforcement (DOE) for their work on the case. She added that the CFTC is dedicated to protecting Americans from fraud “regardless of the technology or borders involved.”

South Africa battling with digital currency fraud cases

U.S. law enforcement bodies, including the FBI, first got involved in the fraud case in 2021. This was after the Texas State Securities Board stopped the company from operating in its jurisdictions in 2020 on allegations of running a digital currency and forex scam targeted at Texans.

Other jurisdictions where the matter is being investigated include South Africa, Belize, and Finland, as well as several U.S. states, including New York and Mississippi.

The defendant was intercepted in Brazil back in April. Despite his protests, Brazilian Supreme court judge Andre Mendonça ruled that Steynberg to be extradited to South Africa, where he left in 2020.

Meanwhile, the case is not the only pyramid scheme involving digital assets to have emerged from South Africa. The masterminds of the $3.7 billion Africrypt fraud case, which is still being probed, also originated from the country. The country has vowed to stamp out bad actors with regulations it plans to introduce for the industry this year.

Watch: The BSV Global Blockchain Convention panel, Blockchain in Africa


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