May 1, 2023

CFTC imposes civil monetary penalty of more than $1.7 billion—the highest ever issued in a CFTC case—and restitution of $1.7 billion

The US Commodity Futures Trading Commission recently announced that a federal judge in the Western District of Texas entered an order of default judgment and a permanent injunction against South African national Cornelius Johannes Steynberg, the owner and CEO of Mirror Trading International Proprietary Limited (“MTI”), a company currently in liquidation in the Republic of South Africa.  The default judgment, which was entered on April 24, 2023, ordered Steynberg to pay $1,733,838,372 in restitution to defrauded victims and imposed a $1,733,838,372 civil monetary penalty that the CFTC reports is the largest civil monetary penalty ever imposed in a CFTC case.  The CFTC also reports that this is the largest fraudulent scheme involving Bitcoin ever charged in a CFTC case.  The order also permanently enjoins Steynberg from committing further violations of the Commodity Exchange Act, registering with the CFTC, and trading in any CFTC-regulated markets.  Steynberg is reportedly a fugitive from South African law who has been detained since 2021 in Brazil on an INTERPOL arrest warrant.

According to the CFTC’s complaint, between May 2018 and March 2021, Steynberg and MTI (“the defendants”) engaged in an international fraudulent multilevel marketing scheme in which they solicited Bitcoin from the public for participation in a fraud-ridden commodity pool operated by MTI and then misappropriated all of the Bitcoin that was collected.  The commodity pool was allegedly traded off-exchange, retail forex through what the defendants falsely claimed was a proprietary “bot” or software program.  The commodity pool was also not registered with the CFTC as a Commodity Pool Operator (“CPO”) as required, and most, if not all, of the pool participants were not eligible contract participants (“ECPs”).  The CFTC alleges that Steynberg, individually and as the agent of MTI, collected at least 29,421 Bitcoin (valued at $1,733,838,372) from individuals around the world, including 23,000 persons in the US.  In furtherance of the scheme, Steynberg also purportedly made fraudulent omissions of material facts in solicitations for the commodity pool.

CFTC Press Release | CFTC Press Release (2022) | Final Default Judgment | Complaint