US CFTC charges South African company with record $1.7 billion bitcoin fraud

A South African man and his firm have been sued in civil court by the U.S. Commodities Futures Trading Commission for running a fraudulent commodity pool with more than $1.7 billion in bitcoin. The allegations were made public on Thursday.

The Commodity Futures Trading Commission (CFTC) claimed the fraud scheme, in which the company supposedly operated a commodity pool via online soliciting bitcoin from thousands of individuals, was the biggest it has ever prosecuted employing the money. The CFTC filed complaints against Cornelius Johannes Steynberg, the CEO of Mirror Trading International Proprietary Limited.

Steynberg had been on the run from South African law enforcement, but the CFTC said that he had just been arrested in Brazil pursuant to an INTERPOL arrest order. He could not be contacted right away for comment.

The firm promised to have unique software that would generate substantial trading returns for investors who pooled their bitcoin with it, according to the CFTC, but in reality no such "bot" existed.

According to the CFTC, the majority of the pooled bitcoin was "misappropriated," and only a tiny fraction of it was actually invested, at a loss. The business finally declared bankruptcy in 2021, and soon after that, South African law enforcement agencies opened a fraud probe.

According to the CFTC, 23,000 Americans made investments in the pool.