CFTC Charges South African CEO for $1.7 Billion Bitcoin Fraud

2022.07.01 20:00

CFTC Charges South African CEO for $1.7 Billion Bitcoin Fraud

• The Commodity Futures Trading Commission has filed civil charges against Mirror Trading International Proprietary Limited and its CEO.
• The fraudulent commodity pool was to the tune of $1.7 billion in Bitcoin.
• Data from Chainalysis shows over $14 billion worth of cryptocurrency went to illicit addresses in 2021 alone.

The Commodity Futures Trading Commission (CFTC) of the United States on June 30 filed civil charges against Mirror Trading International Proprietary Limited and its CEO, Cornelius Johannes Steynberg. This development came via a report from Reuters in the early hours of July 1.

The US commodity regulator said the fraud scheme saw the firm solicit Bitcoin online from thousands of people to operate a phantom commodity pool. The fraudulent commodity pool was to the tune of $1.7 billion in Bitcoin, representing the largest the regulator had ever pursued involving the cryptocurrency.

According to the CFTC, the company claimed to have proprietary software that would realize significant trading gains for investors who pooled their bitcoin with them, but it was a hoax in reality. Only a tiny portion of the pooled Bitcoin was invested, which was at a loss while he misappropriated the rest of it. The company ultimately filed for bankruptcy in 2021, shortly after which South African authorities launched a fraud investigation.

Steynberg had been a fugitive from South African law enforcement but was recently detained in Brazil on an INTERPOL arrest warrant.

Bitcoin fraud is becoming popular daily, with more subtle shakedowns disguised as business opportunities. In 2021 alone, over $14 billion worth of cryptocurrency went to illicit addresses, according to data available on Chainalysis. Also, in 2020, the U.S. Treasury Department filed criminal charges against two Russian citizens, Danil Potekhin and Dmitrii Karasavidi, indicting them of siphoning $17 million in crypto from 342 customers on Binance, Gemini, and Poloniex. They set up fake web pages to camouflage the login pages of the popular crypto exchanges to harvest user login details.