Federal Court Orders South African Company to Pay Over $1.7 Billion in Restitution for Forex Fraud

The U.S. District Court for the Western District of Texas has entered a consent order against Mirror Trading International Proprietary Limited (MTI), a South African company currently in liquidation. The court found MTI liable for multiple violations, including fraud in connection with retail foreign currency (forex) transactions, fraud as a commodity pool operator (CPO), registration violations, and failure to comply with CPO regulations. This ruling comes as a result of a complaint filed by the Commodity Futures Trading Commission (CFTC) on June 30, 2022.

The court order, issued on September 6, requires MTI to pay more than $1.7 billion in restitution to defrauded victims. Additionally, it permanently enjoins MTI from engaging in further violations of the Commodity Exchange Act (CEA) and imposes permanent trading bans in any CFTC-regulated markets. Furthermore, the order includes a registration ban against MTI.

This legal action stems from a comprehensive enforcement case brought forward by the CFTC against MTI. Notably, the U.S. District Court for the Western District of Texas had previously entered a default judgment against Cornelius Johannes Steynberg, the founder and CEO of MTI, on April 24, 2023. This default order mandates Steynberg to pay over $1.7 billion in restitution to defrauded victims and a staggering civil monetary penalty exceeding $1.7 billion. This penalty is the highest ever ordered in any CFTC case.

The case highlights the CFTC's commitment to combating fraudulent schemes and protecting investors. MTI and Steynberg were accused of orchestrating an international fraudulent multilevel marketing scheme that solicited Bitcoin from individuals for participation in an unregistered commodity pool operated by MTI. The commodity pool, controlled by MTI and Steynberg, purportedly traded retail forex through a proprietary "bot" or software program. During the scheme's operation, Steynberg, on behalf of MTI, accepted over 29,000 Bitcoins, valued at more than $1.7 billion, from over 23,000 individuals in the U.S. and thousands more worldwide. However, the defendants misappropriated all the Bitcoin they received from pool participants.

Director of Enforcement Ian McGinley emphasized the CFTC's dedication to pursuing fraudsters, regardless of their location or the nature of their schemes. McGinley stated, "Whether a scam involves fictitious electronic trading 'bots' or Bitcoins, as this action involving a South African entity shows, we will pursue the scam artists wherever they may be."

The CFTC has issued a cautionary note, reminding the public that court orders requiring the payment of restitution to victims may not always result in the recovery of lost funds, as wrongdoers may lack sufficient assets to cover such payments. Nevertheless, the CFTC remains committed to fighting for customer protection and ensuring that wrongdoers are held accountable for their actions.

The CFTC expressed its gratitude for the cooperation and assistance received from various regulatory authorities, including the South African Financial Sector Conduct Authority, the Financial Services Commission of Belize, the Texas State Securities Board, the Alabama Securities Commission, the North Carolina Secretary of State, Securities Division, and the Mississippi Secretary of State, Securities Division.