There is an ongoing regulatory move from several countries to oversee the activities of the crypto industry due to illicit dealings. The U.S. Commodity Futures Trading Commission (CFTC) has slammed charges against Cornelius Johannes Steynberg & Mirror Trading International Proprietary Limited (MTI) for irregularities.
According to the CFTC charge sheet, Steynberg is alleged to have played a part in multilevel marketing (MLM) fraud on a global scale. The MLM scheme has tricked participants out of $1.7 billion in BTC tokens.
Additionally, Steynberg used his company, MTI, as a front in the Ponzi scheme, which began on May 18, 2018, and ended on March 30, 2021.
CFTC Moves Case to the District Court of Texas
According to CFTC commissioner Kristin Johnson, the accused floated an unprofitable investment scheme where he looted 29,421 BTC toke belonging to investors. Johnson added that the CFTC wants full restitution on behalf of the victims of the fraud.
Furthermore, the regulator seeks other civil financial penalties and a permanent ban on the defendant’s operating license. This is the largest fraud case charged by the commission involving the flagship cryptocurrency.
In May, the CFTC announced its readiness to tackle illegal financial dealings in the crypto space as it has enough resources. And the current court case against Steynberg and MTI is an indication of what is to come next.
Steynberg, a South African national, is a wanted man as he was recently arrested in Brazil under an INTERPOL arrest warrant. Before his arrest in Brazil, he evaded the lens of South African law enforcement before fleeing the country.
CFTC on a Broad Crackdown
The CFTC has made regulation its topmost priority in light of the happenings in the crypto sector for some time. The commission also charged Gemini Trust Company LLC, known as Gemini, with false claims.
According to the CFTC, Gemini allegedly deceived authorities in 2017 by submitting false information to obtain approval for its Bitcoin Futures Products.
Even as regulations continue to be challenging to authorities, the CFTC is not relenting in its drive to purge the crypto industry of illegal activities. With crypto adoption rising, the chances of individuals or firms floating questionable investment products are high.
Will CFTC Help Recover Looted Funds?
It is unlikely that victims of fraud schemes can recoup their capital, as the CFTC claimed that restitution might not lead to funding recovery. However, the commission’s claim is shocking despite revealing that it’s pursuing compensation for victims.
Moreover, the process of restitution orders may be cumbersome from the point of view of the CFTC. Getting the offenders to reimburse investors’ funds is not a straight line, especially if the defendant has left no trail of their assets. In the worst-case scenario, investors may lose every cent of their invested capital.
This means that victims can only hope for the court and CFTC to make it possible for them to recover all or part of their funds in cases of fraud.