South Africa, Brazil, U.S, and Others Take Action involving Billion Dollar Bitcoin Ponzi Scheme

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South Africa, Brazil, U.S, and Others Take Action involving Billion Dollar Bitcoin Ponzi Scheme

Last month, Johann Steynberg, who has been accused of running one of the largest cryptocurrency-related fraud schemes of all time, was found guilty, in Brazil, of using forged identity documents. Steynberg, the former CEO of Mirror Trading International (MTI), had fled to Brazil to avoid charges related to the fraud scheme in his native South Africa.

According to the Commodity Future Trading Commission and the South African Financial Sector Conduct Authority, from approximately May 2018 through approximately March 2021, Steynberg, individually and as the controlling person of MTI, engaged in an international pyramid scheme to solicit Bitcoin from members of the public.

According to regulators, MTI "processed" anywhere from 29,000 to 46,000  Bitcoin from investors soliciting Bitcoin investments from consumers all over the world. MTI claimed that it would engage in Bitcoin “bot-trading” which would produce 10% returns per month. MTI also offered substantial bonuses to investors that referred new investors into the project.

Ultimately, however, the trading mechanism was illusory and MTI and Steynberg were using investor funds for personal use. Steynberg disappeared in December 2020 shortly after investors raised concerns that their withdrawals could not be processed.

In April 2023, the CTFC announced that a U.S. federal judge entered an order of default judgment requiring Steynberg to pay $1,733,838,372 in restitution to defrauded victims and a $1,733,838,372 civil monetary penalty, which is the highest civil monetary penalty ordered in any CFTC case. According to the agency, the action is also the largest fraudulent scheme involving Bitcoin charged in any CFTC case.

While Steynberg’s Brazilian sentence was originally around three years, it was later commuted to a fine as he faces extradition back to South Africa for the underlying investment fraud.

TRM's on-chain analysis shows that MTI was using new investor funds to pay old ones and no substantial trading was being performed.

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