CFTC Secure $1.7 Billion Restitution in Mirror Trading International Case

CFTC have taken decisive action against the collapsed Mirror Trading International (MTI). The United States District Court for the Western District of Texas has issued a landmark order, demanding that MTI pays a staggering $1.7 billion in restitution to victims. This case revolves around MTI’s involvement in a fraudulent scheme that encompassed digital assets and forex trading, as announced by the Commodity Futures Trading Commission (CFTC) on September 7.

The CFTC’s investigation unveiled that MTI, led by its CEO Cornelius Steynberg, was operating what they termed an “international multi-level marketing scheme.” This scheme lured in nearly 30,000 Bitcoin (BTC) from at least 23,000 individuals in the United States. Promising access to an unregistered commodity pool in exchange for BTC contributions, MTI and Steynberg failed to deliver on their commitments, leading to massive financial losses for investors.

The CFTC’s statement underscored that MTI had misappropriated the majority of the funds entrusted to them, marking a pivotal moment in a case first initiated by the authority in June 2022. This enforcement action comes on the heels of MTI’s provisional liquidation in late 2020, triggered by the alleged escape of one of its directors, who absconded with the Bitcoin investments entrusted to the company.

Back in January 2021, MTI had boasted over 260,000 members spanning 170 countries, with investors facing losses totaling approximately $1 billion by the time of liquidation. The MTI scandal stands out as one of the most substantial Ponzi schemes involving digital assets in history.

CFTC Commissioners Address Crypto Regulation and Enforcement

CFTC Commissioner Kristin Johnson, in her announcement, urged the public to stay vigilant and informed about potential scams and abuses in digital asset markets. She highlighted the CFTC’s dedication to tackling fraud in the industry and revealed that, since June 2023, the Commission has resolved or initiated ten fraud cases involving digital assets or forex. Johnson emphasized that the Commission will do what is necessary to protect its markets from fraud.

These developments coincide with CFTC Commissioner Caroline Pham’s advocacy for a limited pilot program aimed at regulating cryptocurrency within the United States. Commissioner Pham asserted that the U.S. may soon need to catch up with crypto-friendly jurisdictions worldwide.

Furthermore, on the same day, the regulator’s Commissioner Summer Mersinger expressed concerns regarding enforcement actions related to decentralized finance protocols. Mersinger argued in favor of engaging with the public and stakeholders rather than relying solely on enforcement actions, signaling potential shifts in the CFTC’s approach to crypto regulation.