CFTC Slaps CEO With Record $1.7 Billion Bitcoin Fraud Charge bitcoinist.com
The CFTC may have caught the “biggest fish” in the ocean. And there could be more.
The US commodity watchdog announced on Friday that it has filed a civil suit against a South African CEO and his company for operating a fictitious commodity pool worth more than $1.7 billion in bitcoin.
The Commodity Futures Trading Commission has filed a case against Cornelius Johannes Stenberg and Mirror Trading International Proprietary Ltd., claiming that a global multilevel marketing operation “falsely” hoarded all bitcoins.
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Biggest fraud investigation ever for CFTC
The CFTC said the scam, in which the company solicited thousands of individuals to operate an online commodity pool with bitcoin, was the largest bitcoin-related fraud it had ever investigated.
The CFTC said that MTI’s lead figure Stenberg took 29,421 BTC worth more than $1.7 billion from 23,000 Americans “and even more globally” for unlicensed commodity pool operations.
The CFTC claims that MTI operated for nearly three years between May 18, 2018 and March 30, 2021.
In a press statement, CFTC Commissioner Kristin Johnson said:
“The defendants’ petty trading activity was unproductive, and they misappropriated almost all of the at least 29,421 bitcoins collected from participants.”
According to Johnson, con artists often take advantage of new techniques, worldwide engagement and “the perceived absence of a police officer on the beat” to carry out their nefarious activities.
MTI’s claims are included in the CFTC’s complaint documents as evidence that the fraud victims believed they were investing in a high-tech investment club.
According to Stenberg, MTI’s algorithms generate “passive income” with a 10% monthly return on investment (ROI). Based on the documentation, referring friends and family earns a bonus.
The total market capitalization of BTC on the weekend chart is $364 billion. Source: TradingView.com
CEO is a wanted man
Sternberg is wanted by South African authorities, but he was recently arrested in the Federal Republic of Brazil on an Interpol arrest warrant, the CFTC revealed.
South African authorities launched an investigation into the fraud after MTI filed for bankruptcy last year.
The allegations against Stenberg and MTI are the most recent move by the agency, which said in May that it was allocating additional resources to keep a close eye on the cryptocurrency sector.
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The CFTC filed a lawsuit earlier this month against Gemini Trust Company for allegedly defrauding executives in 2017.
According to the CFTC, the cryptocurrency exchange made “materially false or misleading claims” in order to gain approval for its bitcoin futures product.
Meanwhile, the CFTC’s action calls for full reimbursement for misguided participants, incarceration, civil monetary penalties, permanent trading and registration prohibition, among other penalties.
Featured image from Coincu News, chart from TradingView.com
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