Crypto Regulation Analysis

US Court Orders Operator of South African Bitcoin Ponzi Scheme to Pay Over $3.4 Billion


Johann Steynberg, the founder and CEO of Mirror Trading International, has been ordered to pay over $1.73 billion in restitution to victims of his bitcoin ponzi scheme. The court has also ordered Steynberg to pay a civil monetary penalty of a similar amount. The Commodity Futures Trading Commission (CFTC) conceded that orders requiring payment of funds “may not result in the recovery of any money lost because wrongdoers may not have sufficient funds or assets.”

‘Largest Fraudulent Scheme Involving Bitcoin’ in the History of the CFTC

A United States Federal Court recently handed down a default judgment and permanent injunction against Johann Steynberg, the CEO of the now-defunct bitcoin ponzi Mirror Trading International (MTI). According to a statement released by the U.S. derivatives regulator the Commodity Futures Trading Commission (CFTC) on April 27, Steynberg is required to pay $1,733,838,372 in restitution to defrauded victims and a $1,733,838,372 civil monetary penalty.

The derivatives regulator’s statement also revealed that the penalty handed down by the court “is [the] highest civil monetary penalty ordered in any CFTC case.” The court action itself is reported to be the “largest fraudulent scheme involving Bitcoin charged in any CFTC case.”

As previously reported by News, Steynberg, who was based in South Africa at the time, had repeatedly faced allegations of operating a bitcoin Ponzi scheme before he fled to Brazil in December 2020. Shortly after his disappearance, liquidation proceedings against MTI were instituted by victims based in South Africa.

Almost a year after he disappeared, Steinberg was captured by Brazilian law enforcement and is awaiting his extradition to either the U.S. or his native home of South Africa.

Steynberg and MTI Failed to Comply With CPO Regulations

As per the CFTC statement, the U.S. court order outlines Steynberg’s alleged fraudulent activities as well as his failure to comply with regulations.

“The order finds that Steynberg, the founder and CEO of Mirror Trading International Proprietary Limited (MTI), a company currently in liquidation in the Republic of South Africa, 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,” reads the CFTC statement.

Although MTI was primarily operating and targeting victims based in South Africa, the CFTC statement claimed that Steynberg and his company had accepted bitcoin from “some 23,000 individuals in the U.S.” without being “registered as a CPO as required.” The regulator also alleged that Steynberg and MTI had “misappropriated all of the Bitcoin they accepted from pool participants.”

Meanwhile, the CFTC also acknowledged in the statement that the penalty handed down by the court may “not result in the recovery of any money lost because wrongdoers may not have sufficient funds or assets.”

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Astha is an experienced Content Writer and Blogger in Blockchain, Tech, Fashion and eCommerce field with a successful track record of working in Creative Content Writing, Public Relations and Growth planning.

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