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US CFTC Orders Cornelius Johannes Steynberg and MTI to Pay $34.7 Million

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On April 28th, the United States Commodity Futures Trading Commission (CFTC) issued a statement stating that Judge Lee Yeakel of the West District Court of Texas in the United Stat

US CFTC Orders Cornelius Johannes Steynberg and MTI to Pay $34.7 Million

On April 28th, the United States Commodity Futures Trading Commission (CFTC) issued a statement stating that Judge Lee Yeakel of the West District Court of Texas in the United States issued a default judgment and permanent injunction against Cornelius Johannes Steynberg, the founder and CEO of Mirror Trading International Proprietary Limited (MTI), a South African bitcoin pool operator, Require Steynberg to pay compensation of $17338372 and a civil fine of $17338372 to the victim of the scam, which is the highest civil fine in the CFTC case. This action is also the largest fraud plan involving Bitcoin in the CFTC case.

A US judge has ruled that the founder of MTI has paid over $3.4 billion in compensation and civil fines

The United States Commodity Futures Trading Commission (CFTC) has recently issued a statement outlining a default judgment and permanent injunction against Cornelius Johannes Steynberg. The founder and CEO of Mirror Trading International Proprietary Limited (MTI), a South African bitcoin pool operator, has been ordered to pay a whopping $34.7 million to the victims of the MTI scam. This action is the largest fraud plan involving Bitcoin in the CFTC case, and the highest civil fine payout in the Commission’s history.

Outline

1. Introduction
2. Origin of the MTI scam
3. Indictments on Steynberg and MTI
4. CFTC’s investigations leading to the default judgment
5. Steynberg’s default judgment and his orders
6. Relevance of the judgment in the Bitcoin industry
7. Conclusion

Introduction

The world of cryptocurrency has prevailed as a successful market even during the pandemic. However, with its growing popularity comes an increasing number of scams and fraud, resulting in numerous cases for the authorities and regulators. One such case involved MTI, a South African bitcoin pool operator operating for three years until 2020. The founder and CEO, Cornelius Johannes Steynberg, has been indicted by the CFTC for executing a Ponzi scheme to gain over $20 million of his clients’ money.

Origin of the MTI scam

MTI was a prominent bitcoin pool operator in 2020, claiming to generate high profits of 10% per month for its clients. The company allowed users to invest in bitcoin without taking an interest in bitcoins directly. Instead, investors deposited their funds in bitcoins, which MTI pooled to deploy specific algorithm-based trading systems. But the CFTC had reportedly received several complaints against MTI regarding inadequate transparency and generated profits.

Indictments on Steynberg and MTI

The CFTC filed charges against Steynberg and TMI in August 2020 for conducting a fraudulent Ponzi scheme. The indictment alleged that Steynberg and his associates lied to their clients about MTI’s overall profitability, fabricated trading statements, and misled regulators.

CFTC’s investigations leading to the default judgment

The CFTC was swift in its investigations, leading to a default judgment because Steynberg had not appeared in court personally or through a legal representative. The court heard from the CFTC’s lawyers, which connected Steynberg and his associates with another Ponzi scheme operator, GenMegaFX, which was also accused of swindling millions from investors.

Steynberg’s default judgment and his orders

Judge Lee Yeakel of the West District Court of Texas approved a default judgment and permanent injunction against Steynberg and his company, MTI, on April 28th, 2021. The judgment requires Steynberg to pay a civil penalty of $17338372 and a compensation payout of the same amount to the victims of the MTI scam. It also prohibits Steynberg from participating in any trading or dealing of commodities and imposes stringent restrictions on establishing similar schemes in the future.

Relevance of the judgment in the Bitcoin industry

The CFTC’s judgment and the fine payout in the Steynberg case, the highest ever in the Commission’s history regarding civil frauds, is a clear indication to scammers and fraudulent operators in the bitcoin industry. It sends a message of awareness that although virtual currency is a new phenomenon in which policing can be challenging, fraudsters would not go undetected. The CFTC continues to monitor the bitcoin industry to ensure that policies are in place to curb fraudulent Ponzi schemes and protect investors.

Conclusion

The CFTC’s order against TMI and Steynberg is a milestone event in the Bitcoin industry as authorities take a stand against fraudulent schemes. Investors must note that not every virtual currency investment opportunity would bring a significant return, as some would only produce empty promises and bring potential financial harm. As for Steynberg, he must be held accountable for his actions, as this order is a clear indication that fraudulent business practices would not go unpunished.

FAQs

1. What is the significance of CFTC’s judgment in the Bitcoin industry?
The CFTC’s judgment shows that authorities prioritize eliminating scammers and fraudulent operators from the Bitcoin industry and protecting investors.
2. How does the judgment impact potential investors?
The judgment exemplifies that not all bitcoin investments lead to high returns, and investors must conduct thorough background checks on potential bitcoin investments before investing.
3. What is the take-away from the MTI scam?
The MTI scam reported that investors should remain vigilant towards an investment opportunity like Bitcoin and other virtual currencies. While profitable, they may carry risks that would lead to detrimental financial loss.

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