US CFTC Files Lawsuit Against South African Operator For $1.7 Billion Scam

The United States Commodity Futures Trading Commission (CFTC) has charged a South African operator for regulatory violations.

The watchdog says it filed a civil enforcement action in a federal court for fraud and registration violations against Cornelius Johannes Steynberg. According to the filing, the accused launched and operated a global FX commodity pool valued at $1.7 billion, which allowed participants to pay only in Bitcoin.

The Defendant Solicited Bitcoin Funds From Investors

The CFTC stated that Steynberg used Mirror Trading International, a South African-based trading firm, to solicit Bitcoin from the public using websites and various social media accounts as promotional tools. The alleged acts occurred between May 2018 and March 2021.

CFTC claimed that the accused accepted 29,421 BTC, which are valued at $1.7 billion at the time. However, the value has gone down to $650 million at the time of writing due to the fall in the price of Bitcoin.

The regulator said the defendants misappropriated all the Bitcoin they received from the pool participants. As a result, it is seeking civil monetary penalties, disgorgement of ill-gotten gains, registration and trading bans for Steynberg, and complete restitution to defrauded investors. Additionally, the CFTC has filed for permanent others involved in the scam to prevent future violations of the CFTC regulations.

CFTC Takes More Enforcement Actions Against Violators

This will be the latest enforcement action the SEC has taken against violators, especially those using soliciting crypto funds from investors. The regulator has also fined several digital asset firms for violations of the Commodity Exchange Act. Last month, the CFTC crypto exchange Gemini was at the receiving end, after the regulator fined the platform for providing misleading or false statements to the CFTC in 2017.

Recently, the CFTC filed a case against the founders of crypto derivatives exchange BitMEX. The company was ordered to pay $30 million as part of fines for the suit filed by the regulator in October 2020. The regulator has also intensified efforts to maintain sanity as the crypto market passes through price volatility.

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