South African Crypto Fraud Case: MTI Held Liable, Ordered to Pay $1.7B
In a significant development, the U.S. Commodity Futures Trading Commission (CFTC) has revealed the outcome of a case regarding a South African company charged with cryptocurrency fraud. According to the CFTC, a judge has entered a consent order against Mirror Trading International Proprietary Limited (MTI), finding the company guilty of various types of fraud and directing it to compensate the numerous victims involved.
Initially, MTI enticed investors with the promise of an investment opportunity, marketing an intelligence software for trading that utilized Bitcoin as the underlying currency. However, investigations uncovered that the company, alongside its CEO, Cornelius Johannes Steynberg, operated a multi-level marketing scheme. Instead of delivering on their claims, MTI collected Bitcoin from investors, encouraging them to participate in an unregistered commodity pool. Regrettably, it was discovered that the trading activity did not rely on a proprietary software program as suggested by the company, as funds were misappropriated by Steynberg and MTI either directly or indirectly.
According to the CFTC, MTI managed to persuade investors to contribute a staggering 29,421 BTC, equivalent to over $1.7 billion at the time. Remarkably, this fraud extended to over 23,000 individuals in the United States and thousands more globally.
The recent court ruling mandates MTI to provide over $1.7 billion in restitution to the victims who have been impacted by their fraudulent activities. Additionally, the court order prohibits the company from violating the Commodity Exchange Act (CEA), trading in CFTC markets, and requires them to register. This decision follows a default judgment issued against Steynberg in April, which obligated him to pay restitution exceeding $1.7 billion, along with an additional civil monetary penalty. It remains unclear whether MTI’s restitution fees will also involve penalties for Steynberg on a personal level.
At present, MTI is undergoing the process of liquidation, while its website has become non-operational. Some reports have suggested that the company paid its employees using Bitcoin, although the CFTC has not commented on these claims beyond allegations of funds being misappropriated.
This judgment serves as a significant step in the fight against cryptocurrency fraud, holding perpetrators accountable for their actions and providing some form of justice for the victims. As authorities continue to crack down on fraudulent schemes, investors are urged to exercise caution when considering investment opportunities in the volatile cryptocurrency market.
