Gate.io Blog CFTC Wins Historic $3.4 billion Penalty in a Massive Bitcoin Fraud Case

CFTC Wins Historic $3.4 billion Penalty in a Massive Bitcoin Fraud Case

11 May 11:41

[//]:content-type-MARKDOWN-DONOT-DELETE
![](https://gimg2.gateimg.com/blog/1679447253155655279redian.jpeg)
## [TL; DR]
The CFTC has won a historic $3.4 billion penalty for MTI and Steynberg fraud charges.

The $3.4 billion win will discourage <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> scammers and other crypto criminals from defrauding investors.

The CFTC case against the MTI fraud highlights the need for standard crypto regulations.

## Introduction 
The crypto regulatory environment is changing with important precedent cases being recorded. We have seen cases where countries, especially the United States, have prosecuted people and crypto businesses from other nations because they have carried digital transactions that have led to the loss of funds for the U.S citizens. This article discusses the recent victory of [CFTC](https://www.gate.io/blog_detail/1158/main-takeaways-from-the-crypto-bipartisan-bill-by-cynthia-lummis-and-kirsten-gillibrand "CFTC") in its case against Steynberg and MTI.

## CFTU’s victory Against Mirror Trading International Proprietary Limited (MTI)
The US financial regulator Commodity Futures Trading Commission’s (CFTC) landmark victory against Steynberg, the founder and CEO of Mirror Trading International Proprietary Limited (MTI) and his company (MTI), a crypto firm behind the biggest <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> fraud, sets a great precedent in the industry.

![](https://gimg2.gateimg.com/image/article/16837761762001683776135_.pic_hd.jpg)
CFTC - Coindesk

The CFTC won a $3.4 million penalty against MIT and Steynberg for a <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> related fraud case where they were charged for swindling money from many United States citizens and other investors around the world.

Judge Lee Yeakel, theTexas District Court Judge, ordered Cornelius Johannes Steynberg and MTI to pay the sum for the fraudulent commodity scheme involving bitcoins and foreign currency. $1.73 billion will go towards restituting the crypto fraud victims while the additional $1.73 billion is a civil monetary penalty.

Although the $3.4 million penalty is the largest in the history of crypto cases, it was awarded on the basis that MIT and Steynberg’s fraudulent scheme was also the biggest in the history of <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> and other digital assets. As such, the penalty is meant to serve as a stern warning against <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> scammers and other perpetrators of fraudulent crypto schemes who hope to skip the wrath of the law.

Read also: [Recent regulatory actions and reports show the CFTC is more eager to oversee Non-security Cryptocurrencies](https://www.gate.io/es/blog_detail/1698/recent-regulatory-actions-and-reports-show-the-cftc-is-more-eager-to-oversee-non-security-cryptocurrencies?lang=en "Recent regulatory actions and reports show the CFTC is more eager to oversee Non-security Cryptocurrencies")

## Background information
In June 2022, the Commodity Futures Trading Commission filed a civil enforcement action against Cornelius Johannes Steynberg of Stellenbosch, a South African citizen and the CEO of Mirror Trading International Proprietary Limited (MTI), a company registered and operating in South Africa, for fraud and infringement of its registration terms.

The case is that Steynberg, through MTI, created and operated a global foreign currency commodity pool that allowed investors to invest <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> and foreign currency to generate streams of revenue. As a result, the depositors contributed a total of $1,733,838,372 to the scheme.

In its litigation, [the CFTC stated that](https://www.cftc.gov/PressRoom/PressReleases/8549-22 "the CFTC stated that") it sought “full restitution to defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against future violations of the Commodity Exchange Act and CFTC Regulations.”

Basically, Steynberg used social media platforms to entice unsuspecting investors to participate in the said commodity pool scheme which MTI operated. In total, the company got 29,421 <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> from 23,000 non-ECPs from the United States and other countries around the world. The CFTC claimed that the defendant defrauded the investors directly and indirectly.

However, the CFTC made it clear that the victims may not be able to get restitution since the defendant may not have the required funds to do so. Through a press release, the [CFTC also said that](https://www.cftc.gov/PressRoom/PressReleases/8696-23 "CFTC also said that") “Steynberg is permanently enjoined from engaging in conduct that violates the Commodity Exchange Act (CEA), as charged, registering with the CFTC, and trading in any CFTC-regulated markets.”

However, on their side, Steynberg and MTI claimed that they were running a <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> investment pool where they traded BTC off-chain through a software program or bot trading algorithms.  Basically, they claimed that the trading bots generated daily profits from the trading activities which they shared with the depositors.

In response the CFTC says that the trading software bots were a sham and were never used. Instead, the funds that some of the investors received was coming from other depositors. Also, the CFTC claims that MTI concealed the losses that it incurred.

The accusation against Steynberg and his associates is that they invested some of the funds in expensive watches, real estate and luxury vehicles. After the multilevel marketing scheme involving <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> failed, Steynberg became a fugitive but was apprehended by Interpol, the international criminal police organization, and is detained in the Republic of Brazil.

![](https://gimg2.gateimg.com/image/article/16837763012011683776148_.pic.jpg)
Interpol tracks criminals - Bitcoinnews

## Implications of the Historic $3.4 billion Penalty on Steynberg and MTI
This case has shown that there are individuals who come up with schemes to defraud many investors thinking that the law cannot catch them. The fact that Steynberg and MTI based in South Africa have been convicted by a United States court of law is an important precedent which should prevent would-be fraudsters from creating similar BTC fraud schemes or [related ones](https://www.gate.io/learn/articles/pyramid-and-ponzi-schemes/154 "related ones").

Secondly, this case has shown the importance of cooperation among different countries and organizations. In this case, the South African government and the government of Brazil  cooperated with the United States to apprehend and convict Steynberg.

In this context, [CFTC said](https://www.cftc.gov/PressRoom/PressReleases/8696-23 "CFTC said"), “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.”

In a related sense, the Involvement of Interpol shows that no matter where a crypto fraudster may relocate to he/she can be apprehended and face the relevant law.

Read also: [Cryptocurrency laws in United States and other countries](https://www.gate.io/blog_detail/384/ "Cryptocurrency laws in United States and other countries")

Also, the CFTC has confirmed that it will remain ever vigilant to deal with individuals who break its law by defrauding its citizens. It said, “The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.”

The prosecution of Steynberg has shown that governments are being proactive in dealing with crimes related to cryptocurrencies. That also shows that national governments can no longer sit back and relax when criminals defraud their people. Right now, the market anticipates that governments will continue to take an oversight role in what is happening in the cryptocurrency sector.

Read also: [Crypto Pump and Dump Scams are Never Worth it, Here is Why](https://www.gate.io/blog_detail/768/crypto-pump-and-dump-scams-are-never-worth-it-here-is-why "Crypto Pump and Dump Scams are Never Worth it, Here is Why")

Again, the successful prosecution of MTI and Steynberg for the crypto fraud case is a clear message to crypto businesses that they should abide by national laws and crypto legislations in countries where their customers live. It is also notable that the United States cannot allow any business to defraud its citizens. Therefore, crypto projects should be transparent and accountable in their activities.

Nevertheless, the statement by CFTC that its victory in this case may not result in restitution of the investors’ funds should compel governments to establish strict legislations to protect crypto investors.

## Conclusion
The victory of CFTC in its legal battle against Steynberg and MTI has set a strong precedent that crypto criminals like fraudsters can be apprehended and prosecuted irrespective of their geographical location. It has also highlighted the need for collaboration among governments and other organizations when dealing with cryptocurrency crimes.

## FAQs
### How do you investigate cryptocurrency fraud?
One can investigate a cryptocurrency fraud by using open-source intelligence and know Your Customer to identify the owner of the address that conducted the fraud. From there, you engage law enforcement agents to gather additional details.

### Can I get money back if I get scammed from bitcoin?
Since it is not possible to reverse a <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> transaction, you can only get your <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> back if the person to whom you send it decides to return it.  You can also get it back if the scammer who is identified and prosecuted agrees to return it.

### Can a crypto scammer be traced?
A crypto scammer can be traced using open-source intelligence and Know Your Customer (KYC). However, not all crypto scammers can be traced.

### Can bitcoin be traced back to me?
The only way that people can identify the sender of <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> is through his/her digital wallet address. They are not able to identify you by name or other details.

### What can you do if you are scammed with cryptocurrency?
If you are scammed with cryptocurrency you can report the transaction to the relevant authority in your country. If there is no authority that handles suspicious cryptocurrency transactions in your country you cannot do anything.

### Who can help you with crypto fraud?
A relevant authority in your country can help you if you [encounter a crypto fraud](https://www.gate.io/learn/course/crypto-security-fraud-safety-and-hack "encounter a crypto fraud"). However, if there is no authorized authority in your country to handle cases of crypto fraud you can do nothing about it.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

BTC/USDT + 2.32%

ETH/USDT + 3.27%

GT/USDT + 1.40%

TL；DR

Introduction

CFTU’s victory Against Mirror Trading International Proprietary Limited

Background information

Implications of the Historic $3.4 billion Penalty on Steynberg and MTI

Conclusion

FAQs

Unbox Your Luck and Get a $6666 Prize

CFTC Wins Historic $3.4 billion Penalty in a Massive Bitcoin Fraud Case

Select language and region

Fiat Currencies