CFTC fines Mirror Trading $1.7B for Bitcoin-related forex fraud

The CFTC has brought or resolved 10 fraud cases involving digital assets or foreign exchange since June 2023, Commissioner Kristin Johnson said.

United States regulators have finally taken steps to resolve an enforcement case against the collapsed Mirror Trading International (MTI).

The United States District Court for the Western District of Texas has ordered MTI to pay $1.7 billion in restitution to victims for operating a fraudulent scheme involving digital assets and forex, the Commodity Futures Trading Commission (CFTC) announced on Sept. 7.

The CFTC noted that MTI and its CEO, Cornelius Steynberg, were engaged in an “international multi-level marketing scheme” that accepted nearly 30,000 Bitcoin (BTC) from at least 23,000 people in the United States. According to the announcement, MTI and Steynberg promised to provide access to an unregistered commodity pool in exchange for BTC contributions, which never took place.

“MTI misappropriated virtually all of the money instead,” the CFTC wrote, adding that the latest court order and restitution effectively conclude a case that the authority filed in June 2022.

As previously reported by Cointelegraph, MTI went into provisional liquidation in late 2020 after one of its directors allegedly escaped the country, grabbing all the Bitcoin that investors had entrusted to the company.

In January 2021, MTI claimed to have over 260,000 members in 170 countries, with investors losing roughly $1 billion at the time of the liquidation. The MTI fraud is believed to be one of the biggest ever Ponzi schemes involving digital assets.

“I strongly encourage all members of the public to stay informed about the potential scams and abuses in digital assets markets by visiting our investor advisory page,” CFTC Commissioner Kristin Johnson wrote in the announcement. She added that the CFTC has brought or resolved ten fraud cases involving digital assets or forex since June 2023, adding:

“I commend the Division of Enforcement for continuing to stay vigilant, and sending a strong message to the market that the Commission will do what is necessary to protect its markets from fraud.”

The news comes as CFTC Commissioner Caroline Pham is advocating for a limited pilot program to address cryptocurrency regulation in the United States. The commissioner on Sept. 7 said that she planned to propose a pilot program for digital asset markets, claiming the U.S. may soon need to “play catch-up” to crypto-friendly jurisdictions.

On the same day, another CFTC Commissioner, Summer Mersinger, also voiced concerns over enforcement actions related to decentralized finance protocols. The commissioner argued that the CFTC should engage with the public and stakeholders instead of relying primarily on enforcement actions.

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