CFTC Files $1.7 Billion Bitcoin-Related Fraud Case Against South African Citizen

CFTC Files .7 Billion Bitcoin-Related Fraud Case Against South African Citizen

The US Commodity Futures Trading Commission, or CFTC, has taken enforcement action against a South African citizen in what the regulator called its “largest Bitcoin-related fraudulent scheme.”

In an announcement on Thursday, The CFTC said it had filed a civil enforcement action in federal court for fraud and registration violations against Cornelius Johannes Steynberg. The South African citizen allegedly created and operated a foreign currency pool totaling over $1.7 billion, only allowing participants to pay using Bitcoin (BTC).

The CFTC alleged that Steynberg used the South African company Mirror Trading International Proprietary Limited to solicit BTC from the public using social media and various websites. From May 2018 to March 2021, the regulator claimed it accepted at least 29,421 BTC—valued at more than $1.7 billion at the time, but roughly $564 million at press time—including from people in the United States. .

“The defendants misappropriated, either directly or indirectly, all of the bitcoins they accepted from pool participants.”the CFTC said. “The CFTC is seeking full restitution to defrauded investors, restitution of ill-gotten gains, civil money penalties, permanent registration and trading bans, and a permanent injunction against future violations of the Commodity and Exchange Act. CFTC regulations.”

The case against Steynberg is the latest in a series of enforcement actions the CFTC has taken against individuals alleged to be using cryptocurrency for illicit purposes or digital asset companies for violations of the Commodity Exchange Act. In June, The CFTC filed a lawsuit against Gemini, alleging that the cryptocurrency exchange made false or misleading statements to the regulator in 2017.. A federal court also ordered the founders of cryptocurrency derivatives exchange BitMEX to pay $30 million in penalties as part of the conclusion of a lawsuit filed by the CFTC in October 2020.

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