A federal court in the United States has ordered Cornelius Johannes Steynberg, the South African CEO behind a $1.7 billion retail forex and commodity pool fraud, to pay a total of $3.4 billion. The amount comprises $1.7 billion in restitution payment to investors defrauded of about 30,000 Bitcoin (BTC) and another $1.7 billion in civil monetary penalty.
Court Awards Record Penalty
Judge Lee Yeakel of the US District Court for the Western District of Texas gave the order on Monday, the Commodity Futures Trading Commission (CFTC) said on Thursday in a statement. The action comes after the July 2022 civil enforcement action filed by the US derivatives markets watchdog against Steynberg for running an unregistered commodity pool between May 2018 and March 2021. The pool defrauded at least 23,000 individuals in the US and other investors worldwide, the CFTC said.
According to the regulator, Steynberg, who founded and ran Mirror Trading International Proprietary Limited (MTI) as the CEO, solicited participation in the pool through BTC payment. However, the company is neither registered as a commodity pool operator (CPO) nor complies with CPO regulations.
The case is the watchdog's biggest action against BTC fraud and got cross-border support from regulators in South Africa and Belize. The $1.7 billion penalty awarded by Judge Yeakel is the highest civil monetary penalty ever awarded in a CFTC case, the regulator noted.
An International Fugitive
The CFTC in the statement noted that Steynberg is a fugitive on the run from South African law enforcement. However, the CEO was arrested in December 2021 following an International Criminal Police Organization (Interpol) arrest warrant. He has been confined in Brazil since then, the regulator added.
Explaining how Steynberg ran the scheme, the derivatives watchdog noted that he deployed "an international fraudulent multilevel marketing scheme."
"MTI and Steynberg controlled the commodity pool and purportedly traded off-exchange, retail forex through what they falsely claimed was a proprietary 'bot' or software program," the CFTC explained, adding that the Founder and his associates "either directly or indirectly" misappropriated all the BTC they collected from investors.
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