CFTC fines Bitcoin trading firm $1.7 billion for forex fraud

• CFTC undertook major enforcement action against MTI and its leadership.
• The scheme lured in nearly 30,000 Bitcoin from at least 23,000 individuals in the United States.

The United States Commodity Futures Trading Commission [CFTC] has taken significant steps to address an enforcement case involving the collapsed Mirror Trading International [MTI].

On 7 September, the United States District Court for the Western District of Texas issued an order requiring MTI to pay $1.7 billion in restitution to victims of their fraudulent activities involving digital assets and forex.

The CFTC’s investigation revealed that MTI, led by its CEO Cornelius Steynberg, was responsible for orchestrating an:

“International multi-level marketing scheme.”

This scheme lured in nearly 30,000 Bitcoin [BTC] from at least 23,000 individuals in the United States. The promise was to grant access to an unregistered commodity pool in exchange for Bitcoin contributions, but this promise was never fulfilled.

Instead, MTI misappropriated nearly all the funds.

The CFTC’s announcement regarding this court order marked the conclusion of a case that had been initiated in June 2022. This signals the resolution of a major enforcement action against MTI and its leadership.

CFTC sends strong message to crypto market

The origins of this case date back to late 2020 when MTI faced provisional liquidation due to one of its directors reportedly fleeing the country with all the Bitcoin entrusted to the company by investors.

By January 2021, MTI claimed to have over 260,000 members across 170 countries. The estimated losses incurred by investors had reached approximately $1 billion by the time of the liquidation.

The MTI fraud stands out as one of the most substantial Ponzi schemes involving digital assets in history.

CFTC Commissioner Kristin Johnson emphasized the importance of public awareness in light of these events. She also advised discretion about potential scams and abuses in digital asset markets by visiting the CFTC’s investor advisory page.

Commissioner Johnson commended the Division of Enforcement for its ongoing vigilance and its commitment to sending a clear message that the Commission will take necessary measures to protect markets from fraud.

CFTC joins crypto regulation efforts

This announcement coincided with efforts by CFTC Commissioner Caroline Pham to advocate

Commissioner Pham expressed concerns about the need for the U.S. to catch up with crypto-friendly jurisdictions. She suggested that a pilot program could help achieve this goal.

On the same day, CFTC Commissioner Summer Mersinger also raised concerns regarding enforcement actions related to decentralized finance [DeFi] protocols. She emphasized the importance of the CFTC engaging with the public and stakeholders.

Mersinger also recommended a more collaborative approach rather than relying solely on enforcement actions.