The Commodity Futures Trading Commission (CTFC) is charging a South African trading company using Bitcoin (BTC) as its base currency for allegedly running the largest-ever BTC trading scheme.
According to a new statement by CTFC Commissioner Kristin Johnson, the regulatory agency is filing a civil enforcement action against Mirror Trading International Proprietary Limited and its founder Cornelius Johannes Steynberg for allegedly running a multi-level marketing crypto scheme.
The CFTC Commissioner alleges that the firm ran a fraudulent scheme to solicit, accept and pool over $1.7 billion to trade off-exchange and retail foreign currency exchange. The statement also alleges the firm claimed that it will use margin, financing, and/or leverage in its trading activities.
“Defendants engaged in an international fraudulent multi-level marketing scheme via various websites, in addition to social media, to solicit Bitcoin from members of the public for participation in their pool.
At least 23,000 of the pool participants most, if not all, of whom were not eligible contract participants were from the United States.
The CTFC alleges that instead of trading funds on foreign exchange platforms, the defendants instead defrauded investors by misappropriating their funds and operating a Ponzi scheme.
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.
As a matter of fact, the little trading that Defendants did was unprofitable, and they misappropriated essentially all of the at least 29,421 Bitcoin accepted from participants.
The lawsuit marks the largest Bitcoin trading scheme ever prosecuted by the CTFC, according to the statement.
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