The Commodity and Futures Trading Commission (CFTC) in the United States has filed a lawsuit against Johannes Steynberg, the chief executive of Mirror Trading International Proprietary Limited (MTI), along with the company. The charges filed against them in the lawsuit are that of fraud and violation of the registration process.
Bitcoin fraud
According to the allegations of the CFTC, the CEO engaged in a global MLM scheme i.e. a multilevel marketing scheme. The CFTC said that Steynberg had used it to accumulate 29,421 Bitcoins, which were valued at $1.7 billion.
The regulatory agency stated that the scheme was carried out from May 2018 and had continued till March 2021. The lawsuit was filed against the company and its chief executive in the Western District of Texas.
A CFTC commissioner, Kristin Johnson issued a statement about the lawsuit. He said that the trading that the company and its CEO had done did not generate any profits and they essentially ended up misappropriating all of the 29,421 bitcoins that they had collected from their investors. He stated that it was common for fraudsters to conduct such scams by leveraging global connectivity, new technology, or a perceived lack of understanding.
It should be noted that the CFTC is not the first regulatory authority to go after MTI’s CEO, who hails from South Africa. INTERPOL had issued an arrest warrant for him for evading the South African authorities, which led to his arrest in Brazil. CFTC stated that it was seeking restitutions for investors who have lost their money.
CFTC’s actions
This is the latest action that the CFTC has taken in its attempt to control the activities in the crypto sector. Back in May, the regulatory agency announced that it was planning on expanding its staff in order to help in monitoring the crypto space and to ensure compliance with all laws.
Moreover, this is not the only lawsuit that the CFTC has filed this year against a crypto-related company. The Gemini crypto exchange was also sued by the regulatory agency in June. According to the charges, the exchange has been accused of misleading regulatory authorities in 2017. In addition, the CFTC stated that falsified statements had also been made by the crypto exchange in order to get a bitcoin futures product approved.
Crypto regulation
The US government appears to be cracking down against the crypto sector more vehemently of late. There has been a lot of talk about regulation, with the Securities and Exchange Commission (SEC) also involved. Gary Gensler, the SEC chair, also recently talked about regulation of the crypto space.
He acknowledged that different regulatory agencies would have to work together in order to oversee the crypto sector because there are different rules that apply to different cryptocurrencies. Furthermore, a crypto regulation bill has also been put forward by Senators Cynthia Lummis and Kirsten Gillibrand, which also outlines a regulatory framework for crypto that assigns responsibilities to both the SEC and CFTC for overseeing the crypto market.
