Johann Steynberg, the brains behind Mirror Trading International, has been slapped with a staggering $1.73 billion restitution order for victims of his notorious bitcoin Ponzi scheme. The court has also imposed an equal amount as a civil monetary penalty. The Commodity Futures Trading Commission (CFTC) admits that recovering funds may be challenging due to the possibility of insufficient assets held by the wrongdoers.
CFTC’s Largest Bitcoin Fraud Case In a landmark judgment, a US Federal Court issued a default judgment and permanent injunction against Johann Steynberg, CEO of the now-defunct Bitcoin Ponzi, Mirror Trading International (MTI). The Commodity Futures Trading Commission (CFTC) announced on April 27 that Steynberg is obliged to pay $1,733,838,372 in restitution to defrauded victims and an identical amount as a civil monetary penalty.
The penalty marks the highest civil monetary penalty ever ordered in a CFTC case and the largest fraudulent Bitcoin scheme charged in any CFTC case.
Steynberg, who was residing in South Africa, faced continuous accusations of running a Bitcoin Ponzi scheme before he fled to Brazil in December 2020. Liquidation proceedings against MTI were initiated by South African victims soon after Steynberg’s disappearance.
Nearly a year later, Brazilian law enforcement arrested Steynberg, who now awaits extradition to either the US or South Africa.
Steynberg and MTI’s Non-Compliance with CPO Regulations According to the CFTC statement, the US court order details Steynberg’s fraudulent activities and non-compliance with regulations.
The order states that Steynberg, the founder and CEO of Mirror Trading International Proprietary Limited (MTI), a company currently in liquidation in South Africa, is liable for fraud in retail foreign currency (forex) transactions, fraud by an associated person of a commodity pool operator (CPO), registration violations, and non-compliance with CPO regulations.
Although MTI primarily targeted victims in South Africa, the CFTC revealed that Steynberg and his company had accepted Bitcoin from approximately 23,000 individuals in the US without proper CPO registration. The regulator also alleged that Steynberg and MTI misappropriated all the Bitcoin they received from pool participants.
The CFTC also recognizes that the court-imposed penalty may not result in the recovery of lost money, as wrongdoers might lack sufficient funds or assets.