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CFTC Alleges South African Commodity Pool Operator Ran a Fraudulent $1.7B Bitcoin Trading Scheme

CFTC | Release | Jun 30, 2022

CFTC bitcoin trading scheme allegations - CFTC Alleges South African Commodity Pool Operator Ran a Fraudulent $1.7B Bitcoin Trading SchemeToday, the Commodity Futures Trading Commission (CFTC) filed a civil enforcement action in the U.S. District Court for the Western District of Texas against Cornelius Johannes Steynberg of South Africa and Mirror Trading International Proprietary Limited (MTI), a South African company, alleging that they operated a fraudulent scheme to solicit, accept, and pool more than $1.7 billion to trade off-exchange, retail foreign currency (forex) on a leveraged, margined and/or financed basis.

Defendants engaged in an international fraudulent multilevel marketing scheme via various websites, in addition to social media, to solicit bitcoin from members of the public for participation in their pool.

At least 23,000 of the pool participants—most, if not all, of whom were not eligible contract participants—were from the United States.

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Instead of trading forex as represented, Defendants misappropriated pool funds, misrepresented their trading and performance, provided fictitious account statements as well as created a fictitious broker at which trading purportedly took place, and in general operated the pool as a Ponzi scheme.

As a matter of fact, the little trading that Defendants did was unprofitable, and they misappropriated essentially all of the at least 29,421 bitcoin accepted from participants.

The CFTC’s complaint seeks full restitution on behalf of defrauded participants, as well as disgorgement, civil monetary penalties, permanent trading and registration bans, and other relief.  Notably, this fraud represents the largest to date charged by the CFTC involving Bitcoin.

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