“Largest fraudulent scheme involving Bitcoin” CFTC called about an enforcement action against the South African national

The United States Commodity Futures Trading Commission, or CFTC, has taken enforcement action against the South African national in what the regulatory body called its “largest fraudulent scheme involving Bitcoin.” The CFTC said “The defendants misappropriated, either directly or indirectly, all of the Bitcoin they accepted from the pool participants,” said the CFTC.

 

The CFTC announced on Thursday, that it had filed a civil enforcement action in federal court for fraud and registration violations against Cornelius Johannes Steynberg. The South African national supposedly created and operated a global foreign currency commodity pool of more than $1.7 billion, only permitting the participants to pay using Bitcoin (BTC).

The CFTC suspected that Steynberg used the South Africa-based firm Mirror Trading International Proprietary Limited to solicit BTC from the public using social media and various websites. From May 2018 to March 2021, the regulatory body demanded that he accepted at least 29,421 BTC — valued at more than $1.7 billion at the time, but roughly $564 million at the time of publication — as well as from individuals in the United States.

The CFTC added,“The defendants misappropriated, either directly or indirectly, all of the Bitcoin they accepted from the pool participants,”. Additionally, “The CFTC seeks full restitution to defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against future violations of the Commodity Exchange Act and CFTC Regulations.”

The case against Steynberg is the newest in a series of enforcement actions the CFTC has taken against individuals allegedly using cryptocurrencies for unlawful purposes or digital asset firms for violations of the Commodity Exchange Act. The CFTC filed a lawsuit against Gemini, in June, demanding the crypto exchange made incorrect or misleading statements to the regulatory body in 2017. A federal court also ordered the founders of crypto derivatives exchange BitMEX to pay $30 million in penalties as part of the decision of a suit filed by the CFTC in October 2020.