South African CEO to Pay Over $3.4 Billion for Forex Fraud, Hits Civil Monetary Penalty Record in CFTC Cases

The U.S. Commodity Futures Trading Commission (CFTC) announced that a judge of the U.S. District Court for the Western District of Texas has issued an order of default judgment and permanent injunction against Cornelius Johannes Steynberg, the founder and CEO of South Africa - based financial services provider Mirror Trading International Proprietary Limited (MTI), requiring Steynberg to pay $1,733,838,372 in restitution to defrauded victims and a $1,733,838,372 civil monetary penalty. The fine is the highest civil penalty in all CFTC cases and the action is the largest fraudulent scheme involving Bitcoin charged in any CFTC case.

On June 30, 2022, the CFTC filed a lawsuit with the court, claiming that from about May 2018 to March 2021, Steynberg, individually and as the controlling person of MTI, participated in a international fraudulent multilevel marketing scheme to solicit Bitcoin from the public to participate in an an unregistered commodity pool operated by MTI, accepting at least 29,421 Bitcoin from more than 23,000 individuals in the United States and other regions of the world, with a total value of over $1.73 billion. MTI and Stynberg controlled the commodity pool and purportedly traded off-exchange, retail forex through what they falsely claimed was a proprietary “bot” or software program. The defendants ended up directly or indirectly misappropriating Bitcoin provided by all participants in the commodity pool.

The order found that Steynberg is liable for fraud in connection with retail foreign currency (forex) transactions, fraud by an associated person of a commodity pool operator (CPO), registration violations, and failure to comply with CPO regulations.

According to the order, Steynberg is permanently enjoined from engaging in conduct that violates the Commodity Exchange Act (CEA), as charged, registering with the CFTC, and trading in any CFTC-regulated markets.