Historic Bitcoin Fraud Scheme: $3.5 Billion to be Paid in Restitutions and Fines
With the evolution of the crypto market comes an increase in fraud cases, resulting in the theft of large amounts of cryptocurrency.
Recently, a South African executive was ordered to pay over $3.4 billion in restitution and fines for his involvement in a fraudulent scheme.
Cornelius Johannes Steynberg, the founder and CEO of Mirror Trading International Proprietary, solicited Bitcoin from individuals for participation in an unregistered commodity pool.
This resulted in soliciting over 29,000 Bitcoin, worth more than $1.7 billion, from at least 23,000 people globally. However, according to the US Commodity Futures Trading Commission, Steynberg misappropriated all of the Bitcoin accepted from pool participants.
Steynberg’s fraudulent scheme operated as a Bitcoin investment pool that generated daily profits using bot trading algorithms. But the CFTC discovered that the bot trading algorithms were a hoax and that Steynberg and other scheme operators had used the pool’s funds for personal enrichment.
The $3.4 billion fine imposed on Steynberg is the largest civil monetary penalty ever in any CFTC case, underscoring the severity of the fraud and the role of Bitcoin in the scheme.
While the verdict may serve as a warning to other bad actors in the crypto space, it also highlights the need for increased regulation in the industry to safeguard investors from fraudulent schemes.
Despite recent developments, including the collapse of major bank First Republic Bank, the crypto market has seen bullish activity. Over the past 24 hours, the global crypto market cap has risen by 1.4%, with a total value of over $1.2 trillion.