The Commodity Futures Trading Commission (CFTC), a U.S. federal regulatory agency, charged a South African citizen and a global foreign currency commodity pool with alleged fraud and registration violations worth nearly $2 billion in BTC.

Fraudulent Scheme Raked in $1.7 Billion in Bitcoin

According to a press release on Thursday (June 30, 2022), the CFTC issued a civil enforcement action against Cornelius Johannes Steynberg and Mirror Trading International Proprietary Limited (MTI) before the U.S. District Court in the Western District of Texas.

The American regulator alleges that Steynberg, who was in control of MTI, was involved in an international fraudulent multilevel marketing scheme between May 2018 and March 2021.

According to the CFTC’s complaint, the South African solicited bitcoin from individuals via social media and different websites to participate in a commodity pool operated by MTI. The regulator noted that investors were, however, not eligible contract participants (ECPs).

Steynberg subsequently received a minimum of 29,421 BTC within the period, valued at over $1.73 billion at the time (now worth $598 million at bitcoin’s current price). About 23,000 participants came from the United States alone. MTI, however, did not register with the CFTC.

Meanwhile, the regulator described the case as “the largest fraudulent scheme involving Bitcoin charged in any CFTC case.” In a separate press release, CFTC Commissioner Kristin Johnson said:

“Instead of trading forex as represented, Defendants misappropriated pool funds, misrepresented their trading and performance, provided fictitious account statements as well as created a fictitious broker at which trading purportedly took place, and in general operated the pool as a Ponzi scheme.”

CFTC Seeks to Become Crypto’s Chief Regulator

Meanwhile, Steynberg is currently a fugitive from South African law enforcement but was apprehended recently in Brazil on an INTERPOL arrest warrant.

A statement from the press release reads:

“CFTC seeks 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.”

However, the federal regulator warned that victims might not get their funds back as the defendants may not have enough funds or assets for repayment.

The latest case comes a month after the CFTC charged two individuals for running a fraudulent scheme that defrauded investors of $44 million. The defendants also operated a commodity pool without a CFTC registration.

According to a recent report by CryptoPotato, the CFTC is looking to become the primary regulatory body for the cryptocurrency industry.