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CFTC brings $1.7B fraud case involving Bitcoin in opposition to South African nationwide

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The United States Commodity Futures Trading Commission, or CFTC, has taken enforcement motion in opposition to a South African nationwide in what the regulatory physique referred to as its “largest fraudulent scheme involving Bitcoin.”

In a Thursday announcement, the CFTC mentioned it had filed a civil enforcement motion in federal court docket for fraud and registration violations in opposition to Cornelius Johannes Steynberg. The South African nationwide allegedly created and operated a world overseas forex commodity pool totaling greater than $1.7 billion, solely permitting the members to pay utilizing Bitcoin (BTC).

The CFTC alleged that Steynberg used the South Africa-based agency Mirror Trading International Proprietary Limited to solicit BTC from the general public utilizing social media and numerous web sites. From May 2018 to March 2021, the regulatory physique claimed that he accepted no less than 29,421 BTC — valued at greater than $1.7 billion on the time, however roughly $564 million on the time of publication — together with from people within the United States.

“The defendants misappropriated, either directly or indirectly, all of the Bitcoin they accepted from the pool participants,” mentioned the CFTC. “The 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.”

Related: The CFTC’s motion in opposition to Gemini is dangerous information for Bitcoin ETFs

The case in opposition to Steynberg is the newest in a sequence of enforcement actions the CFTC has taken in opposition to people allegedly utilizing cryptocurrencies for illicit functions or digital asset companies for violations of the Commodity Exchange Act. In June, the CFTC filed a lawsuit in opposition to Gemini, claiming the crypto change made false or deceptive statements to the regulatory physique in 2017. A federal court docket additionally ordered the founders of crypto derivatives change BitMEX to pay $30 million in penalties as a part of the conclusion of a swimsuit filed by the CFTC in October 2020.