South African CEO Ordered to Pay $1.7 Billion in Restitution and Penalty in Landmark CFTC Case
On April 27, 2023, the US Commodity Futures Trading Commission (CFTC) announced that it had obtained a default judgment and permanent injunction against Cornelius Johannes Steynberg, founder and CEO of Mirror Trading International Proprietary Limited (MTI).
The order requires Steynberg, a fugitive from South African law enforcement, to pay $1,733,838,372 in restitution to defrauded victims and a $1,733,838,372 civil monetary penalty, the highest civil monetary penalty ever ordered in any CFTC case.
Steynberg is liable for fraud in connection with retail foreign currency (forex) transactions, fraud by an associated person of a commodity pool operator (CPO), registration violations, and failure to comply with CPO regulations. The case stems from a CFTC complaint filed on June 30, 2022, which found that Steynberg engaged in an international fraudulent multilevel marketing scheme to solicit Bitcoin from members of the public for participation in an unregistered commodity pool operated by MTI.
During the period from May 2018 to March 2021, Steynberg, individually and as the controlling person of MTI, accepted at least 29,421 Bitcoin worth over $1,733,838,372 from at least 23,000 individuals in the U.S. and even more throughout the world, to participate in the commodity pool without being registered as a CPO as required. The defendants misappropriated all of the Bitcoin they accepted from pool participants, either directly or indirectly.
Under the order, Steynberg is permanently enjoined from engaging in conduct that violates the Commodity Exchange Act (CEA), registering with the CFTC, and trading in any CFTC-regulated markets. The CFTC’s litigation continues against MTI.
The CFTC cautions that orders requiring payment of funds to victims may not result in the recovery of any money lost because wrongdoers may not have sufficient funds or assets. Nevertheless, the CFTC will continue to fight vigorously for the protection of customers and to ensure wrongdoers are held accountable.
The CFTC appreciates the assistance of the South African Financial Sector Conduct Authority, the Financial Services Commission of Belize, the Texas State Securities Board, the Alabama Securities Commission, the North Carolina Secretary of State, Securities Division, and the Mississippi Secretary of State, Securities Division in this case. The Division of Enforcement staff members responsible for this case are Timothy J. Mulreany, Danielle Karst, George Malas, Julia C. Colarusso, and Paul G. Hayeck.
This action against Steynberg is significant as it is the largest fraudulent scheme involving Bitcoin charged in any CFTC case. The CFTC’s success in this case sends a strong message that fraudulent conduct involving digital assets will not be tolerated and that the agency is committed to pursuing wrongdoers who engage in such conduct.
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