Johann Steynberg sued by CFTC over MTI fraud ($1.7B Ponzi)
Mirror Trading International CEO Johan Steynberg has been sued by the CFTC.
According to the regulator, Mirror Trading International was a $1.7 billion dollar Ponzi scheme.
The CFTC filed their lawsuit against Mirror Trading International and Cornelius Johannes Steynberg (right) on June 30th.
The CFTC have identified “at least 23,000” MTI investors from the US, noting there are even more elsewhere in the world.
Together Mirror Trading International investors handed over 29,421 bitcoin, which at the time of the CFTC’s investigation had a street value of $1.7 billion.
In reality there was no MTI bot. Steynberg and accomplices Clynton and Cheri Marks (right), who I’ve long suspected are the actual owners of MTI, pork-barrelled investor funds for their own benefit.
Defendants misappropriated, either directly or indirectly, all of the Bitcoin they accepted from pool participants.
In furtherance of the fraudulent scheme, Steynberg, individually and as the agent of MTI, made fraudulent omissions of material facts in solicitations to actual and prospective pool participants, including but not limited to failing to disclose that:
(a) Defendants misappropriated pool funds;
(b) there was no trading “bot” successfully trading on behalf of participants;
(c) no profitable trading in forex or anything else took place on behalf of participants;
(d) “account statements” provided to participants were actually simulated trades from “demo” accounts created via the MetaTrader 4 (“MT4”) electronic trading platform;
(e) purported “returns” paid to some participants were in fact the principal deposits of other participants; and
(f) the online broker Trade300, where Defendants purportedly traded participants’ Bitcoin, was a fictitious entity created by Steynberg to further the fraudulent scheme.
The CFTC puts forth that Steynberg, the Marks and their accomplices have pocketed most of 27,574 bitcoin. A small percentage of the take was used to operate MTI (payments to top recruiters and limited ROI withdrawals).
Defendants failed to deposit 27,574 Bitcoin from participants into the Pool account at FXChoice.
Defendants’ limited trading in the FXChoice Pool account resulted in overall losses, and Defendants misappropriated the remaining 27,574 Bitcoin sent by participants to Defendants for trading, including by failing to use all of the funds for trading and by providing Bitcoin to certain participants as sham “profits” and “bonus” payments in the nature of a “Ponzi” scheme.
By pitching a forex related investment scheme to US residents and failing to register with the CFTC, the regulator alleges MTI and Steynberg violated the Commodity Exchange Act.
Steynberg was eventually arrested in January 2022, on an Interpol international arrest warrant requested by South Africa.
South Africa has requested Steynberg’s extradition. Steynberg is fighting extradition on the basis he impregnated a Brazilian mistress while on the run.
Steynberg’s defense was revealed earlier this month by way of Brazilian court documents. There have been no further updates.
The CFTC’s Complaint acknowledges Steynberg’s current status but doesn’t go into any further details;
Steynberg’s last known residence is in Stellenbosch, Western Cape South Africa.
Currently, he is a fugitive from South African law enforcement but was recently detained in the Federative Republic of Brazil (“Brazil”) on an INTERPOL arrest warrant.
Relief sought by the CFTC against Mirror Trading International and Steynberg includes:
- confirmation they violated the Commodity Exchange Act and CFTC Rules;
- a permanent injunction barring any further trading activity (fake or otherwise);
- disgorgement; and
- restitution to Mirror Trading International victims, including pre-judgment and post-judgment interest; and
- payment of a civil monetary fine.
If granted, one particularly interesting request by the CFTC will see MTI and Steynberg;
make an accounting to the Court of all of their assets and liabilities, together with all funds they received from and paid to participants and other persons in connection with commodity interests and all disbursements for any purpose whatsoever of funds received from commodity interests, including salaries, commissions, interest, fees, loans, and other disbursement of money or property of any kind from at least December 2017 to the date of such accounting.
That will almost certainly implicate the Marks as the actual operators and primary beneficiaries of Mirror Trading International.
But that’s not going to happen until the CFTC win the case. First things first, when is Steynberg being extradited and what’s going to happen to him once he lands in South Africa?
The CFTC acknowledged the assistance of a raft of cooperating authorities, including South Africa’s FSCA;
The CFTC appreciates the assistance of the South African Financial Sector Conduct Authority, the Financial Services Commission of Belize, the Finnish Financial Supervisory Authority, the Texas State Securities Board, the Alabama Securities Commission, the North Carolina Secretary of State, Securities Division, the Mississippi Secretary of State, Securities Division, the U.S. Attorney’s Office for the Southern District of New York, and the Federal Bureau of Investigation’s Southern District of New York Field Office.
Outside of that though the FSCA has shown no interest in holding Mirror Trading International scammers accountable. Clynton and Cheri Marks remain at large within South Africa itself.
One wildcard is the prospect of Steynberg and his accomplices being indicted in the US. Cooperation between the CFTC and DOJ suggests this might have happened (in which case the indictment would be under seal).
Either way we’re unlikely to know what happens with respect to criminal proceedings until Steynberg is secured from Brazil.
I’ve added the CFTC’s Mirror Trading International fraud case to the BehindMLM’s calendar. Stay tuned for updates as we continue to track the case.