It is believed that MTI conducted one of the biggest Ponzi schemes linked to crypto.
The United States Commodity Futures Trading Commission (CFTC) has resolved a major enforcement case against Mirror Trading International (MTI), imposing a significant fine.
On September 7th, the US District Court for the Western District of Texas mandated that MTI must compensate victims $1.7 billion.
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The decision comes after MTI and its CEO, Cornelius Steynberg, were found guilty of running an "international multi-level marketing scheme" that deceived at least 23,000 US residents by collecting approximately 30,000 Bitcoin (BTC) from them.
In exchange for their BTC investments, MTI and Steynberg promised access to an unregistered commodity pool, which never occurred. According to the CFTC, the company misused nearly all of the funds.
In the announcement, the CFTC indicated that this restitution concludes the legal proceedings it initiated in June 2022.
The background of the case dates back to late 2020 when MTI entered provisional liquidation following the disappearance of one of its directors and the company's Bitcoin holdings. At the time of liquidation, the firm claimed to have around 260,000 members across 170 countries and is believed to be one of the largest Ponzi schemes ever involving digital assets, with about $1 billion in investor losses.
In a public statement, CFTC Commissioner Kristin Johnson encouraged the general public to be vigilant about potential scams in the digital asset sector.
I commend the Division of Enforcement for continuing to stay vigilant, and sending a strong message to the market that the Commission will do what is necessary to protect its markets from fraud.
Meanwhile, other CFTC commissioners are looking to make progress in cryptocurrency regulation. On the same day as the MTI announcement, Commissioner Caroline Pham proposed a limited pilot program to improve digital asset market regulation in the US, suggesting that the country needs to "play catch-up" to more crypto-friendly jurisdictions.
The CFTC's decision to fine MTI $1.7 billion marks a significant step in holding fraudulent crypto operators accountable. As regulators continue to ramp up enforcement and seek new regulatory approaches, the message is clear: fraud and deceit have no place in the emerging world of digital assets.
