US regulator accuses South African company of record $1.7 billion bitcoin fraud
The US commodities regulator announced on Thursday that it has filed civil charges against a South African man and his company for operating a fraudulent commodity pool worth more than $1.7 billion in bitcoin.
The Commodity Futures Trading Commission (CFTC) said the fraud scheme, which saw the firm operate commodity pools of online bitcoins from thousands of people, was the largest ever pursuit involving the cryptocurrency. The CFTC filed charges against Mirror Trading International Proprietary Limited and its CEO, Cornelius Johannes Stenberg.
The CFTC said Stenberg was a fugitive from South African law enforcement, but was recently detained in Brazil on an Interpol arrest warrant. He could not be immediately reached for comment.
The CFTC said in its complaint that the company claimed to have proprietary software that would realize significant trading benefits for investors who deposited their bitcoins with it, but that no such “bot” actually existed.
In fact, according to the CFTC, only a small fraction of the deposited bitcoins were ever invested at losses, and the rest were “falsely charged.” The company eventually filed for bankruptcy in 2021, shortly after which South African authorities launched an investigation into the fraud.
The CFTC said about 23,000 Americans have invested in the pool.