The Man Behind The Largest Bitcoin Fraud Charged By The Cftc
Cornelius Steynberg, the founder of Mirror Trading International Proprietary Limited (MTI), has been sued for fraud, misrepresentation, and misappropriation by the Commodity Futures Trading Commission (CFTC).
According to the official press release, this is the largest enforcement action taken by the CFTC involving Bitcoin. Steynberg is said to have accumulated at least 29,421 BTC worth $1.7 billion by defrauding participants in a scheme he was running through MTI, a fraudulent crypto exchange.
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“Instead of trading forex as represented, Defendants misappropriated pool funds, misrepresented their trading and performance, provided fictitious account statements as well as created a fictitious broker at which trading purportedly took place, and in general operated the pool as a Ponzi scheme,” it continued.
So, who is Cornelius Johannes Steynberg – the man behind this heist?
Steynberg is a South African resident who founded MTI in May 2018. He operated the fraudulent exchange for 3 years until March 2021. Throughout this period, he orchestrated a multi-level marketing (MLM) scheme by leveraging various websites and social media platforms.
He duped investors into sending Bitcoin to a ‘community pool’ which was nothing but a Ponzi scheme. Steynberg then used this Bitcoin to execute off-exchange trades with unregistered participants who he insisted were eligible contract participants (ECPs).
Steynberg masked his trades with these unregistered accounts by representing them as a proprietary bot-trading mechanism. MTI’s executive even claimed that these proprietary bots would provide average returns of 10% per month.
MTI reported that the official broker for many of these transactions, Trade 300, was later found to be under Steynberg’s control as well. Therefore, at the helm of MTI and his fictitious brokerage firm, Steynberg was in control of all the investor funds.
Troubles began in July 2020, when the Texas State Securities Board (TSSB) issued a cease-and-desist against on Mirror Trading International (MTI). Once news of this broke, anxious invested tried withdrawing funds but complained of delayed payouts. Despite this, MTI did not report losses or cease to function.
It was only when ‘Anonymous ZA’, a South African group, hacked into the MTI systems in September 2020 that the skewed pay-out system for pool participants was revealed. Members were rewarded for new referrals and fresh onboardings, which is a classic Ponzi scheme.
Then, in October 2020, the South African regulator, the Financial Sector Conduct Authority (FSCA), cracked down upon MTI and raided the homes of several top executives of the firm and seized all electronic devices.
With the authorities hot on his heels, Steynberg allegedly “received” an email in late November from an anonymous source. The email warned him of a coming raid by the FSCA. He used this email as an excuse to flee the country on the 2nd of December 2020, leaving his wife to manage his affairs in his absence.
A whole year went by without any news of Steynberg. He disappeared with all the funds and left investors in the lurch. He had even locked out all key management from MTI’s local bank account.
Then, on January 13, 2022, a police unit received a tip about a foreigner using a fake ID. The person they apprehended was none other than Cornelius Johann Steynberg. As per the police reports, Steynberg initially lived within his means in a simple São Paulo hotel. However, a few months later, he moved to the Brazilian state of Goiás and began living a luxurious life.
According to Captain Jonathan Andrade, one of the arresting police officers, Steynberg had six credit cards, all registered under his new identity. He also began a romantic relationship with an unnamed woman whom he showered with expensive gifts. According to Andrade’s sources, Steynberg had also acquired a private jet and high-end vehicles.
In an official statement, Andrade said that “, he was sent to the Federal Police Station, and then other international institutions contacted us, like the FBI. He will probably be charged in Brazil for using false documents used to make a new identity; then the Federal Police will possibly send him for extradition.”
Following his arrest, it has been revealed that South Africa has a legal assistance agreement with Brazil. Under this agreement, they could extradite Steynberg and ensure he faces the music on home soil. However, the US has a similar agreement with the South American nation, and could proceed to enforce lawsuits registered against Steynberg, including the one by CFTC.
