The Commodity Futures Trading Commission (CFTC) announced that it has taken decisive action against the defunct Mirror Trading International (MTI). This enforcement case has finally come to a close as the United States District Court for the Western District of Texas orders MTI to pay $1.7 billion in restitution to victims.
CFTC’s Stringent Approach and Mirror Trading’s Misconduct
The CFTC’s commitment to protecting investors is evident as it actively addresses fraudulent activities in the digital asset and foreign exchange space. Commissioner Kristin Johnson revealed that the CFTC has either brought or resolved ten fraud cases related to digital assets or forex since June 2023.
MTI, led by CEO Cornelius Steynberg, was found to be operating an “international multi-level marketing scheme.” They accepted approximately 30,000 Bitcoin (BTC) contributions from over 23,000 individuals in the United States. MTI promised access to an unregistered commodity pool in exchange for BTC. However, it failed to deliver on its commitments, misappropriating the funds entrusted to them.
Resolution of a Prolonged Case
This court order and the accompanying restitution mark the conclusion of a case initiated by the CFTC in June 2022. The saga of MTI’s fraudulent activities began unraveling in late 2020. This was when one of its directors absconded with investors’ Bitcoin, subsequently leading to the company’s provisional liquidation.
At the time of liquidation in January 2021, MTI claimed to have more than 260,000 members spanning 170 countries. The losses suffered by investors amounted to approximately $1 billion, making MTI’s fraud one of the most significant Ponzi schemes involving digital assets.
CFTC’s Vigilance Continues
CFTC Commissioner Kristin Johnson emphasizes the importance of public awareness regarding potential scams and abuses in digital asset markets. She commends the Division of Enforcement for their unwavering vigilance. She further sends a clear message that the Commission will take decisive actions to protect its markets from fraud.
In a related development, CFTC Commissioner Caroline Pham is advocating for a limited pilot program to address cryptocurrency regulation in the United States. She believes that the U.S. may need to catch up with crypto-friendly jurisdictions.
A Call for Engagement
Simultaneously, CFTC Commissioner Summer Mersinger highlights concerns about enforcement actions related to decentralized finance protocols. She argues that the CFTC should engage with the public and stakeholders in addition to relying on enforcement actions.
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