US regulators have taken significant steps toward resolving the enforcement case surrounding the defunct Mirror Trading International (MTI) scheme. The United States District Court for the Western District of Texas has issued an order, as announced by the Commodity Futures Trading Commission (CFTC) on September 7, mandating MTI to make a $1.7 billion restitution payment to victims. This action addresses MTI’s fraudulent operations involving digital assets and forex.
The CFTC’s investigation revealed that MTI, led by CEO Cornelius Steynberg, was involved in an international multi-level marketing scheme. The scheme collected nearly 30,000 bitcoins from at least 23,000 individuals in the United States. MTI and Steynberg had promised to grant access to an unregistered commodity pool in exchange for BTC contributions, but this promise was never fulfilled.
Instead, MTI misappropriated the vast majority of the funds. This recent court order and the accompanying restitution signify the conclusion of a case initiated by the CFTC in June 2022. MTI entered provisional liquidation in late 2020 after one of its directors allegedly absconded with all the bitcoin entrusted to the company by investors.
In January 2021, MTI claimed to have more than 260,000 members across 170 countries, with investors losing approximately $1 billion at the time of liquidation. This fraud involving MTI is considered one of the largest Ponzi schemes in the digital asset space.
CFTC Commissioner Kristin Johnson emphasized the importance of public awareness regarding potential scams and abuses in digital asset markets. She praised the Division of Enforcement for its vigilance in addressing fraud cases related to digital assets and forex, with ten cases being brought or resolved since June 2023.
The news coincides with CFTC Commissioner Caroline Pham’s call for a limited pilot program to address cryptocurrency regulation in the United States. She suggested that the US may need to catch up with crypto-friendly jurisdictions. On the same day, another CFTC Commissioner, Summer Mersinger, expressed concerns about enforcement actions related to decentralized finance protocols, advocating for more engagement with the public and stakeholders in lieu of primarily relying on enforcement actions.
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