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CTFC wins record $3.4B penalty payment in Bitcoin-related fraud case

CTFC wins record $3.4B penalty payment in Bitcoin-related fraud case

A record-breaking $3.4 billion penalty has been handed down by a Judge in a lawsuit brought by a United States financial regulator involving a fraudulent scheme involving Bitcoin (BTC).

An April 27 statement from the Commodity Futures Trading Commission (CFTC) said Texas District Court Judge Lee Yeakel ordered Cornelius Johannes Steynberg to pay the sum for his role in perpetrating a fraudulent commodity pool scheme involving foreign currency transactions and Bitcoin.

Steynberg, a South African national and CEO of Mirror Trading International Proprietary Limited (MTI), a purported trading and networking company, was ordered to pay $1.73 billion in restitution to defrauded victims and an additional $1.73 billion civil monetary penalty.

The CFTC said it is the “highest civil monetary penalty ordered in any CFTC case” and also “the largest fraudulent scheme involving Bitcoin charged in any CFTC case.”

The order explained that as the head of MTI, Steynberg “engaged in an international fraudulent multilevel marketing scheme to solicit Bitcoin from members of the public for participation in an unregistered commodity pool,” the value of which totaled more than $1.7 billion as of March 2021.

From May 2018 to March 2021, the CFTC claimed he accepted at least 29,421 BTC valued at more than $1.7 billion at the time — but currently worth approximately $867 million — from 23,000 individuals in the U.S. and even more globally.

“Either directly or indirectly, the defendants misappropriated all of the Bitcoin they accepted from pool participants,” the CFTC wrote.

According to the April 27 order, Steynberg was found liable for fraud in connection with retail foreign currency transactions, fraud by an associated person of a commodity pool operator (CPO), registration violations and failure to comply with CPO regulations.

Additionally, Steynberg is permanently prohibited from engaging in conduct that violates the Commodity Exchange Act (CEA). He is also permanently banned from registering with the CFTC or trading in any CFTC-regulated markets.

Related: Former FTX exec Ryan Salame’s home searched by FBI: Report

On June 30, 2022, the CFTC announced that it had filed a civil enforcement action in federal court for fraud and…

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