In its “biggest fraudulent scheme employing Bitcoin,” the United States Commodity Futures Trading Commission, or CFTC, has launched enforcement action against a South African resident.
The CFTC announced on Thursday that it has brought a civil enforcement action for fraud and registration breaches against Cornelius Johannes Steynberg in federal court.
The South African national is accused of setting up and running a $1.7 billion worldwide commodity pool for foreign exchange that exclusively accepted Bitcoin payments from participants (BTC).
The CFTC claimed that Steynberg solicited Bitcoin from members of the public via social media and numerous websites by utilizing the South African company Mirror Trading International Proprietary Limited.
The regulatory authority asserted that between May 2018 and March 2021, he accepted at least 29,421 BTC, valued at more than $1.7 billion at the time but about $564 million at the time of writing, including from Americans.
According to the CFTC, “the defendants misappropriated all of the Bitcoin they accepted from the pool participants, either directly or indirectly.”
“The CFTC seeks full restitution to the investors who were cheated, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC Regulations.”
The Commodity Futures Trading Commissionhas pursued a number of enforcement measures, including the case against Steynberg, against people who are allegedly using cryptocurrencies for illegal activities, or against companies that deal in digital assets. These actions are in violation of the Commodity Exchange Act.
The CFTC launched a complaint against Gemini in June, alleging that the cryptocurrency exchange misled the watchdog in 2017. The creators of the cryptocurrency derivatives exchange BitMEX was also ordered by a federal court to pay $30 million in fines as part of the resolution of a case brought by the CFTC in October 2020.