The case represents the CFTC’s largest civil penalty and largest bitcoin fraud case.

The U.S. Commodity Futures Trading Commission (CFTC) said on April 27 that it had obtained a court ruling against a CEO involved in a Bitcoin-related fraud.

CEO involved in Bitcoin MLM

The case concerns South Africa’s Cornelius Johannes Steynberg, founder and CEO of Mirror Trading International Proprietary Limited (MTI).

Steynberg participated in an international multi-level marketing (MLM) scheme in which he solicited Bitcoin investments from the public.

Steynberg and his company promised investors the opportunity to participate in a commodity pool. Not only was the commodity pool unregistered, Steynberg and MTI falsely described the pool’s trading activities as bots, when in fact they were trading over-the-counter retail forex. The two pwraties ultimately stole all of their investors’ Bitcoin.

Steynberg began his MLM scheme in May 2018 and solicited funds from more than 23,000 people in the United States and around the world. In total, he received nearly 30,000 BTC, which was worth $1.7 billion when the scheme ended in March 2021.

Steynberg faces largest civil penalty in CFTC history

The CFTC said it would fine Steynberg $3.4 billion, with half of that amount going toward restitution to victims and the other half toward civil penalties.

The above amount is the largest civil penalty ever imposed by the CFTC, and the case itself is the agency's largest fraud case involving Bitcoin to date.

Steynberg has also been barred (or prohibited) from registering with the CFTC, participating in CFTC-regulated markets, and engaging in activities that violate the Commodities Rules. Today’s announcement states that Steynberg has been held in Brazil on an Interpol arrest warrant since December 2021 and remains a fugitive from South African authorities.

The CFTC previously charged Steynberg’s firm directly in 2022. The agency has also taken action against a number of other crypto-related groups and individuals in recent months, including the Mango Markets hacker and the founder of OokiDAO.

Most notably, the CFTC announced charges against major cryptocurrency exchange Binance and several of its executives in March.