The U.S. commodities regulator has filed civil charges against a South African man and his company for operating a fradulent commodity pool worth over 1.7 billion U.S. dollars in bitcoin.
The Commodity Futures Trading Commission (CFTC) said the fraud scheme is the largest fraudulent scheme involving Bitcoin charged in any CFTC case.
Mirror Trading International Proprietary Limited (MTI) and its CEO, Cornelius Johannes Steynberg are charged in the case.
The complaint accuses Steynberg of engaging in an international fraudulent multilevel marketing scheme that brought in 29,421 BTC. The agency says Steynberg also used MTI in the scheme, which ran for nearly three years from May 18, 2018, through March 30, 2021.
Steynberg had been a fugitive from South African law enforcement but was recently detained in Brazil on an INTERPOL arrest warrant, the CFTC said. He could not be immediately reached for comment.
The CFTC said in its complaint that the company claimed to have proprietary software that would realize significant trading gains for investors who pooled their bitcoin with it, but in reality no such “bot” existed.
In reality, only a small portion of the pooled bitcoin was ever invested, at a loss, and the rest was “misappropriated,” according to the CFTC. The company ultimately filed for bankruptcy in 2021, shortly after which South African authorities launched a fraud investigation.
The CFTC said approximately 23,000 people invested in the pool.
While the CFTC says it is seeking full restitution to investors, the agency cautions victims that restitution orders may not result in the recovery of money lost.
Story compiled with assistance from wire reports