- The CFTC announced charges against a bitcoin firm for defrauding investors out of $1.7 billion.
- Mirror Trading International operated as a fraudulent multi-level marketing scheme, the CFTC said.
- "This action is the largest fraudulent scheme involving Bitcoin charged in any CFTC case," the regulator said,
The Commodities Futures Trading Commission on Thursday charged Mirror Trading International and the firm's owner, Cornelius Steynberg, with fraud, claiming the company operated as a fraudulent multi-level marketing scheme that scammed billions from investors.
"This action is the largest fraudulent scheme involving Bitcoin charged in any CFTC case," the commission said in a statement. Investors who pooled funds in the company, which was advertised as a bitcoin trading pool, lost a total 29,421 Bitcoin, a value of over $1.7 billion.
The firm, based in South Africa, advertised returns as high as 10% a month through investments manged by a trading "bot". CFTC documents state that Mirror Trading invented account figures and created "a fictitious broker at which the trading purportedly took place." Commissioner Kristin Johnson called the company a "Ponzi scheme" in a statement.
Cryptocurrency investors have dealt with a wave of scams and hacks this year. Earlier this month, the FTC reported that over 46,000 crypto owners were scammed in 2021, accumulating losses of over a billion dollars in bitcoin, ether, and other digital assets.
News of Steynberg's fraud also came on the same day the FBI announced a $100,000 reward for "Cryptoqueen" Ruja Ignatova, who stole $4 billion from victims in another scam. The Department of Justice on Thursday also charged six individuals with running various crypto schemes.
The CFTC said it was looking into heavier regulation of cryptocurrencies last month, according to the Wall Street Journal. In the meantime, the commission stated it is in the process of returning funds to MTI's investors – although it may not fully recover the money members had in the pool.