The United States regulators have taken action to address the enforcement case involving the collapsed Mirror Trading International (MTI). On September 7, the United States District Court for the Western District of Texas ordered MTI to pay $1.7 billion in restitution to victims for its involvement in a fraudulent scheme that included digital assets and forex, according to the Commodity Futures Trading Commission (CFTC).
The CFTC stated that MTI, along with its CEO Cornelius Steynberg, operated an international multi-level marketing scheme. They accepted nearly 30,000 Bitcoin (BTC) from around 23,000 individuals in the United States. The scheme promised to provide access to an unregistered commodity pool in exchange for BTC contributions, a promise that was never fulfilled.
In reality, the CFTC revealed that MTI misappropriated the majority of the funds. This court order and restitution mark the conclusion of a case that the CFTC initiated in June 2022.
In late 2020, MTI went into provisional liquidation after one of its directors allegedly fled the country, taking all the Bitcoin that investors had entrusted to the company. By January 2021, MTI claimed to have over 260,000 members in 170 countries, with investors experiencing losses of approximately $1 billion. This fraud is considered one of the largest Ponzi schemes involving digital assets in history.
CFTC Commissioner Kristin Johnson emphasized the importance of public awareness in safeguarding against scams and abuses in digital asset markets. She encouraged individuals to stay informed by visiting the CFTC’s investor advisory page. Johnson praised the Division of Enforcement for their continued vigilance in sending a clear message that the Commission will take the necessary steps to protect markets from fraud.
Meanwhile, CFTC Commissioner Caroline Pham is advocating for a limited pilot program to address cryptocurrency regulation in the United States. On September 7, Pham expressed her intention to propose a pilot program for digital asset markets, suggesting that the U.S. may need to catch up to other crypto-friendly jurisdictions.
Additionally, CFTC Commissioner Summer Mersinger voiced concerns about enforcement actions related to decentralized finance protocols. Mersinger argued that the CFTC should engage with the public and stakeholders rather than relying primarily on enforcement actions.
The recent actions taken by the CFTC reflect the ongoing efforts to regulate the crypto industry and protect investors from fraudulent schemes. The MTI case serves as a reminder of the risks associated with unregulated investments and the importance of due diligence when participating in the digital asset market.
As the crypto industry continues to evolve, it is crucial for regulators to stay proactive and adapt to new challenges. Pilot programs and open dialogue between regulators, industry participants, and the public can help ensure a balanced regulatory framework that fosters innovation and protects investors.