CEO to pay $3.4bn in CFTC’s largest fraud scheme case involving bitcoin – April 27, 2023
The CFTC has just taken action against a CEO in what is the largest fraudulent scheme to date involving bitcoin. The US District Court for the Western District of Texas has brought default judgment and permanent injunction against Cornelius Johannes Steynberg of Stellenbosch, Western Cape, Republic of South Africa.
From May 2018 through March 2021, the order finds that Steynberg, the founder and CEO of Mirror Trading International Proprietary Limited (MTI), individually and within MTI, ran an international fraudulent multilevel marketing scheme to solicit bitcoin from members to MTI’s unregistered commodity pool.
Over 29,421 bitcoins were accepted to the pool – valued at over $1,733,838,372 at the time, from at least 23,000 US individuals, and even more globally. Steynberg was not registered as a CPO at the time. The CFTC says the funds were all misappropriated.
The order finds Steynberg liable for fraud in connection with retail foreign currency transactions, fraud by an associated person of a commodity pool operator (CPO), registration violations, and failure to comply with CPO regulations.
Steynberg is required to pay $1,733,838,372 in restitution to defrauded victims and $1,733,838,372 in civil monetary penalty – the highest civil monetary penalty ordered in any CFTC case to date.
He will also be permanently enjoined from engaging in conduct that violates the Commodity Exchange Act, registering with the CFTC, and trading in any CFTC-regulated markets.
Stenberg is currently a fugitive from South African law enforcement, but has been detained on a Interpol arrest warrant in Brazil since December 2021.
Precious metals dealers and their owners targeted elderly in a multimillion fraud scheme – April 25, 2023
Fisher Capital LLC and AMS Consulting Solutions LLC d/b/a Fisher Capital (collectively Fisher Capital), and its principal, Alexander Spellane (also known as Alexander Overlie) have been charged for targeting elderly people nationwide to invest in a precious metals fraud scheme.
According to the complaint, from June 2020 to the present, hundreds of elderly people were defrauded into investing more than $30m in gold and silver coins – which were worth far less than the defendants led victims to believe.
Allegedly, Fisher Capital made high-pressure phone sales pitches to customers that were “permeated with material misrepresentations, misleading half-truths, and deceptive omissions designed to build trust with elderly customers; instil fear about the safety of traditional retirement and savings accounts; and deceive victims into purchasing grossly overpriced precious metals from Fisher Capital”.
The CFTC is seeking the return of ill-gotten gains, civil monetary penalties, restitution, permanent registration bans, and permanent injunctions against further violations of the Commodity Exchange Act and CFTC regulations. The Commission also seeks to permanently bar the defendants from trading precious metals commodities, or from trading commodity interests.
“As alleged, the defendants operated as wolves in sheeps’ clothing. Under the guise of helping seniors to protect their retirement nest eggs… Fisher Capital and Spellane systematically fleeced retirees out of a significant chunk of their life savings.”
Ian McGinley, Director of Enforcement, CFTC
New York-based swap dealer pays over $6.8m to settle violations over business conduct standards – April 25, 2023
The CFTC has simultaneously filed and settled charges against the provisionally registered swap dealer Mizuho Capital Markets LLC for trade practice violations of the Swap Dealer Business Conduct Standards in the Commodity Exchange Act (CEA) and CFTC regulations.
Between June 2018 and December 2020, Mizuho failed to make adequate disclosures to customers around certain foreign exchange forward transactions. Trading may sometimes have contributed to moving the spot exchange rate, which means that the customers may have obtained the currency it sought to acquire at a less favorable rate.
The order requires Mizuho to cease and desist from further violations of these standards, and to pay $1,847,182.90 in restitution and $5m in civil monetary penalty.
“Congress mandated these standards to ensure that honesty and transparency prevail in swaps markets, including over-the-counter swaps markets. Our significant penalties here reflect the consequences swap dealers face from failing to meet these standards.”
Ian McGinley, Director of Enforcement, CFTC
Firms fraudulently claiming to be registered with the CFTC – April 21, 2023
A total of 14 entities have been charged for fraudulently claiming to be registered with the CFTC as futures commission merchants and retail foreign exchange dealers.
The entities claim to be based in the UK, Sweden, North Dakota, New York, California, and Arkansas, and are called Betatradeoptions.com,
Bitfinmarket.com, Bit Block FXtrades, Bit Trading, Cross Trade FX, Fast Option, Subdivision, Garantitradedemiss.com, Garantitrademinex.net,
Instantearners247.com, Prime Finance Network, Sparkleswhite.com, TFX Trading, Trust Pay Market and Voltfxtrade.
Twelve of the entities also claim to have an identical NFA Identification number. The other two claim to have a different, but still identical, NFA Identification number.
Each complaint requires the respondent to cease and desist from committing violations of the Commodity Exchange Act and CFTC regulations.