The US Commodity Futures Trading Commission (CFTC) has taken significant steps to resolve an enforcement case involving the collapsed Mirror Trading International (MTI). On September 7, the CFTC announced that the US District Court for the Western District of Texas had issued an order requiring MTI to pay $1.7 billion in restitution to victims of a fraudulent scheme related to digital assets and foreign exchange.
The CFTC's announcement outlined that MTI, along with its CEO Cornelius Steynberg, participated in an "international multi-level marketing scheme" that accepted nearly 30,000 Bitcoins, with at least 23,000 of them originating from the United States. The scheme promised access to an unregistered commodity pool in exchange for Bitcoin contributions, a promise that was never fulfilled.
According to the CFTC, MTI "misappropriated substantially all of the funds." This latest court order effectively concludes the case that the CFTC filed in June 2022. MTI had entered provisional liquidation at the end of 2020, following allegations that one of its directors had fled the country with all the Bitcoin entrusted to the company by investors.
At its peak in January 2021, MTI claimed to have over 260,000 members in 170 countries, and investors faced losses amounting to approximately $1 billion due to the liquidation. The MTI case is considered one of the largest Ponzi schemes ever involving digital assets.
CFTC Commissioner Kristin Johnson urged the public to stay informed about potential fraud and abuse in the digital asset markets and commended law enforcement for their vigilance in addressing fraud and sending a strong message to the market.
These developments in the MTI case come as CFTC Commissioner Caroline Pham advocates for a limited pilot program to address cryptocurrency regulation in the United States, emphasizing the need to "catch up" with crypto-friendly jurisdictions. Additionally, Commissioner Summer Mersinger has expressed concerns about relying on enforcement actions rather than engaging with the public and stakeholders in the regulation of decentralized finance protocols.
