Crypto Fraud: South African firm fined US$3.4 billion

South Africa has once again found itself at the centre of some of the world’s biggest crypto fraud cases.  

A US federal court in Texas has ordered the CEO of a South African firm to pay $3.4 billion for bitcoin fraud. This is now the biggest fraud case involving bitcoin.

In July 2022, Cornelius Johannes Steynberg, head of Mirror Trading International (MTI), was charged by the Commodities Future Trading Commission (CFTC) for running a $1.7 billion bitcoin scam. From 2018 to 2021, Steynberg, told customers that his firm would help trade bitcoin.

By the end of 2021, however, the firm had misappropriated over 29,421 bitcoin worth $1.7 billion from over 23,000 victims.

While Steynberg was charged with the $1.7 billion fraud in 2022, a federal judge last week ordered him to pay $3.4 billion—$1.7 billion in restitution to victims, and another $1.7 billion as a penalty.

Last year, MyBroadBand reported that the liquidators of MTI recovered 1,281 bitcoin frozen by its former brokerage in Belize, FXChoice. The liquidators immediately sold the bitcoin and received R1.1 billion (~$65 million) for the assets.

Unfortunately, victims of MTI’s fraud may not receive their dues as several government agencies are after the firm for one fee or the other. The South African Revenue Services (SARS) slapped the firm with a $55 million fine for back taxes while liquidators of MTI and Steynberg are also clamouring for legal fees which reportedly cost over $13.3 million.

At this point, Steynberg is considered a fugitive from South African authorities while MTI has been declared a pyramid scheme.