The Commodity Futures Trading Commission (CFTC) in the United States has taken significant steps to address a long-standing enforcement case involving Mirror Trading International (MTI), which had collapsed earlier. On September 7, the United States District Court for the Western District of Texas ordered MTI to pay $1.7 billion in restitution to victims. The case revolved around a fraudulent scheme related to digital assets and forex trading.
Fraudulent Scheme Involving Digital Assets
The CFTC revealed that MTI and its CEO, Cornelius Steynberg, were involved in what they described as an “international multi-level marketing scheme.” This scheme accepted approximately 30,000 Bitcoin from at least 23,000 individuals in the United States. MTI and Steynberg had promised to grant access to an unregistered commodity pool in exchange for BTC contributions, a promise that was never fulfilled. Instead, the CFTC stated that MTI misappropriated nearly all of the funds.
The latest court order and restitution bring closure to a case that the CFTC had filed in June 2022. MTI had entered provisional liquidation in late 2020, leading to significant losses for investors, as one of its directors allegedly fled the country with all the entrusted Bitcoin.
One of the Largest Digital Asset Ponzi Schemes
MTI’s fraudulent activities were extensive, with the scheme claiming over 260,000 members across 170 countries in January 2021. Investors had lost approximately $1 billion by the time of the liquidation, making it one of the largest Ponzi schemes involving digital assets.
CFTC Commissioner Kristin Johnson emphasized the importance of staying informed about potential scams and abuses in digital asset markets. The CFTC has been actively addressing such issues and has, since June 2023, either brought or resolved ten fraud cases involving digital assets and forex markets. Johnson commended the Division of Enforcement for its vigilance in sending a strong message that the Commission will take necessary actions to safeguard markets from fraud.
Cryptocurrency Regulation Pilot Program
In related news, CFTC Commissioner Caroline Pham has proposed a limited pilot program to address cryptocurrency regulation in the United States. Pham believes that the U.S. may need to “catch up” with crypto-friendly jurisdictions. Meanwhile, another CFTC Commissioner, Summer Mersinger, has raised concerns about enforcement actions related to decentralized finance protocols, advocating for more public engagement and stakeholder involvement in regulatory decisions.