US charges Steynberg, MTI with fraud

The US Commodity Futures Trading Commission (CFTC) filed a civil action against Mirror Trading International (MTI) and its former CEO Johann Steynberg on Thursday, charging them with fraud and registration violations.

The charge sheet says Steynberg “created and operated, through MTI, a global foreign currency commodity pool that only accepted Bitcoin to purchase a participation in the pool, with a value of over $1 733 838 372. This action is the largest fraudulent scheme involving Bitcoin.”

The CFTC says it is seeking full restitution to defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against future violations of the Commodity Exchange Act and CFTC Regulations.

“The CFTC cautions victims that restitution orders may not result in the recovery of money lost, because the wrongdoers may not have sufficient funds or assets,” the commission warns.

An interesting feature of the complaint is that both Steynberg and MTI are cited as respondents, which means the liquidators of MTI as trustees will have to respond to the case, opening up a new front in their long legal battles to recover missing Bitcoin.

It has been speculated that this may also be a prelude to criminal charges being filed against Steynberg in the US, in which case a request for his extradition to the US may be forthcoming.

This would pose an interesting two-way tussle between SA and the US for Steynberg.

Court filings before the Western Texas District Court say Steynberg and MTI accepted at least 29 421 Bitcoin with a value of over $1.7 billion (R28 billion).

Steynberg and MTI “misappropriated, either directly or indirectly, all of the Bitcoin they accepted from pool participants.”

Of the more than 200 000 MTI investors worldwide who participated in the scheme, which was offering bogus returns of 10% a month, 23 000 were US investors. Of these 23 000, 1 341 are known to reside in Texas.

The US complaint says Steynberg made fraudulent misrepresentations, claiming a trading bot was achieving 10% profits a month, and that these funds were being traded in a pooled account, first at the Belize-based broker FX Choice, and later at the fictitious entity Trade300. –