The Commodity Futures Trading Commission (CTFC) is accusing a South African trading firm that uses Bitcoin (BTC) as its base currency of allegedly running the largest BTC trading system ever.
The regulator is filing a civil enforcement action against Mirror Trading International Proprietary Limited and its founder Cornelius Johannes Steynberg for allegedly running a multi-tiered marketing crypto scheme, according to a new statement from CTFC Commissioner Kristin Johnson.
The CFTC commissioner alleges that the company operated a fraudulent scheme to solicit, accept and pool over $1.7 billion to trade over the counter and retail in foreign currencies. The statement also claims that the company has claimed that it will use margin, funding and/or leverage in its trading activities.
“The defendants engaged in an international fraudulent multi-level marketing scheme through various websites, in addition to social media, to solicit bitcoin from members of the public to join their pool.
At least 23,000 of the pool participants—most, if not all, were ineligible contract participants—were from the United States.”
The CTFC alleges that instead of trading funds on forex platforms, the defendants instead defrauded investors by embezzling their funds and running a Ponzi scheme.
“Defendants embezzled pool funds, misrepresented their trading and performance, provided fictitious bank statements and created a fictitious broker with whom they allegedly traded, and generally operated the pool in a Ponzi scheme.
In fact, what little trading the defendants engaged in was unprofitable, and they abused essentially all of the at least 29,421 bitcoin accepted by the participants.”
The lawsuit is said to be the largest bitcoin trading scheme ever prosecuted by the CTFC.
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Featured image: Shutterstock/sdecoret/Konstantin Faraktinov