The Commodity Futures Trading Commission charged Mirror Trading International and boss Johannes Steynberg with alleged fraud and registration violations on Thursday.
The commission deemed the South Africa-based operation as the “largest fraudulent scheme involving Bitcoin charged in any CFTC case.”
Mirror Trading International allegedly engaged in an “international fraudulent multilevel marketing scheme,” for nearly three years, according to the complaint. Steynberg allegedly solicited Bitcoin from members of the public for participation in a commodity pool operated by Mirror Trading International — without being registered as an operator — from May 2018 to March 2021.
“The defendants misappropriated, either directly or indirectly, all of the Bitcoin they accepted from the pool participants,” the CFTC said in a release. The commission filed its civil enforcement action in the US District Court for the Western District of Texas.
Steynberg allegedly accepted at least 29,421 BTC, with a value of more than $1.7 billion, from 23,000 participants in the United States who were not eligible contract participants. He also took contributions from others around the world, according to the CFTC.
Per the agency, Steynberg “purportedly traded off-exchange, retail foreign currency on a leveraged, margined and/or financed basis” with the participants “through what the defendants falsely claimed was a proprietary ‘bot’ or software program.”
Investigators in the United States joined the investigation into Mirror Trading International last summer, Bloomberg reported in August. The commission is seeking restitution to defrauded investors and disgorgement of ill-gotten gains. The CFTC is also seeking civil monetary penalties, permanent registration and trading bans and a permanent injunction against future violations of CFTC rules and the Commodity Exchange Act.
Steynberg disappeared two years ago after Mirror Trading International stopped payouts to many of its members. He was arrested in Brazil last year and lost a bid earlier this month to be released from prison ahead of an extradition hearing, according to South African news outlet News24.
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