The Commodities Futures Trading Commission (CFTC) has dragged a South African and his company to court over breaching some regulations. According to the filed charges, the regulator alleges that the company’s CEO swindled a large pool of investors in what is suspected to be around $1.7 billion in the leading digital asset, Bitcoin. Asides from that, the regulator is also saying that the company has failed several validation checks meaning that it has violated the law in that regard.
More than 23,000 Americans were affected by the scam
According to the statement by the CFTC, CEO Cornelius Steynberg ran the operation for three years between 2018 and 2021. The statement mentioned that the modus operandi of Steynberg was to use his company, Mirror Trading International, to coax thousands of people to invest using digital assets for huge rewards.
Outside the thousands of people that the platform scammed, the CFTC alleges that the platform took funds in Bitcoin from more than 23,000 citizens of the United States of America. The statement also mentioned that the company asked the users to pay these funds to use the funds for business such as forex and other activities to pool in rewards.
CFTC seeks restitution of embezzled funds
In the statement submitted by the CFTC, the platform failed to use the pooled funds for the exact activities it mentioned to the users. Instead, the company used a smokescreen to convince users that their funds were in safe hands while embezzling all the said funds. The regulator also mentioned that MTI invested only a small amount of funds. The company also lied to its users about using trading bots which guaranteed profits. The statement also mentioned that this was the biggest case involving digital assets that the CFTC has ever worked on.
According to the CFTC, the charged parties took to social media amid other websites to advertise their products, where they pooled in many users who registered and sent Bitcoin to a provided wallet. Aside from the penalty the firm will face if found guilty, the CFTC wants its activities confiscated and the funds returned to users. Steynberg had been hiding out the last few years until regulators sighted him in Brazil, where he was arrested. With the market seeing a massive downturn in the last few months, these malicious actors will continue to use money-making promises like these to defraud users. This means that users need to be careful about their decisions in the market during this period.