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CFTC Orders $1.7 Billion Restitution in MTI Fraud Case

Martin Walker
Sep 9, 2023 at 01:04 pm

Regulators in the United States have at last taken measures to resolve a legal case involving the now-defunct Mirror Trading International (MTI).

On September 7, the Commodity Futures Trading Commission (CFTC) revealed that the United States District Court for the Western District of Texas has issued an order demanding MTI to compensate victims with $1.7 billion in restitution. This stems from their involvement in a deceptive scheme revolving around digital assets and forex trading.

The CFTC pointed out that MTI, under the leadership of Cornelius Steynberg, was implicated in a sprawling "international multi-level marketing scheme." This scheme amassed nearly 30,000 Bitcoin from at least 23,000 individuals residing in the United States. According to the announcement, MTI and Steynberg had pledged to grant access to an unregistered commodity pool in exchange for BTC contributions, but these promises were never fulfilled.

The CFTC went on to state that "MTI misappropriated virtually all of the money instead." This recent court order for restitution essentially brings to a close a case that the regulatory body initiated in June 2022.

MTI entered provisional liquidation in late 2020 following the alleged escape of one of its directors, who absconded with all the Bitcoin entrusted to the company by investors.

In January 2021, MTI claimed to have over 260,000 members across 170 countries, with investors having lost approximately $1 billion by the time of the company's liquidation. The MTI fraud is believed to be one of the most extensive Ponzi schemes involving digital assets in history.

CFTC Commissioner Kristin Johnson, in the announcement, urged the public to stay informed about potential scams and abuses in digital asset markets by visiting their investor advisory page. She added that the CFTC has initiated or resolved ten fraud cases pertaining to digital assets or forex trading since June 2023, emphasizing, "I commend the Division of Enforcement for continuing to stay vigilant and sending a strong message to the market that the Commission will take necessary actions to safeguard its markets from fraud."

This development coincides with CFTC Commissioner Caroline Pham's push for a limited pilot program to address cryptocurrency regulation in the United States. On September 7, Commissioner Pham mentioned her intention to propose such a pilot program for digital asset markets, citing the possibility that the U.S. might need to catch up with crypto-friendly jurisdictions.

On the same day, another CFTC Commissioner, Summer Mersinger, expressed concerns regarding enforcement actions linked to decentralized finance protocols. She argued that the CFTC should actively engage with the public and stakeholders rather than relying primarily on enforcement measures.

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