close up of hands holding folded dollar bills

Mirror Trading boss fined over $3B in US over unlawful crypto Ponzi scheme

The Commodity Futures Trading Commission (CFTC) has earned its largest civil monetary penalty after a U.S. District Court for the Western District of Texas entered an order of default judgment against South African national Cornelius Johannes Steynberg.

Steynberg was charged with operating a multi-level marketing scheme, which was found to be a fraudulent enterprise that stole over 29,421 BTC from thousands of investors. Valued at nearly $2 billion, Steynberg misrepresented to investors that the assets would be deployed in a commodity pool with profits generated using a proprietary bot.

Court documents reveal that Steynberg misappropriated all the BTC from investors, sparking a CFTC investigation in 2022. After nearly one year in court, Steynberg was ordered to pay $1.7 billion in restitution and another $1.7 billion in a civil monetary penalty.

The CFTC announced that in addition to the monetary penalties, Steynberg was hit with a lifetime ban from registering with the CFTC or trading in any markets regulated by the CFTC. The commission disclosed that the latest victory is a case against Steynberg, noting that another legal battle is brewing against Steynberg’s legal entity, Mirror Trading International Proprietary Limited (MTI).

It is unclear if Steynberg has the funds to comply with the court’s order and is currently in custody in Brazil after a stint as a fugitive. After evading South African law enforcement, Interpol issued a “red notice” in 2021 for Steynberg as the race for his extradition heats up.

“The CFTC cautions that orders requiring payment of funds to victims may not result in the recovery of any money lost because wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable,” the press statement read.

CFTC’s impressive haul

Stakeholders in the digital currency industry have pointed out that the CFTC has an impressive record against bad actors, given the weight of its fines. In 2021, the commodities regulator ordered Tether to pay $42 million for making misleading statements regarding its stablecoin.

The CFTC has been described as the “toughest regulator” for digital assets in the U.S., with impressive records against Kraken, Coinbase (NASDAQ: COIN), and Gemini. The commission has not shied away from novel areas, as shown in its debacle with Ooki DAO as the court ordered the regulator to serve founders with notice of a lawsuit.

The CFTC also slapped a civil lawsuit against Binance for “a calculated, phased approach,” which experts believe could be fatal for the digital currency exchange.

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