Trading On margin

CFTC Unveils Allegations of $1,700,000,000 Bitcoin Swap Scheme in Biggest Indictment Ever Involving BTC

The Commodity Futures Trading Commission (CTFC) accuses a South African trading company of using Bitcoin (BTC) as its base currency for allegedly running the largest BTC trading system ever.

According to a new statement from CTFC Commissioner Kristin Johnson, the regulatory agency is bringing a civil action against Mirror Trading International Proprietary Limited and its founder Cornelius Johannes Steynberg for allegedly running a multi-tiered crypto-marketing scheme.

The CFTC commissioner alleges that the company implemented a fraudulent scheme to solicit, accept and pool more than $1.7 billion to trade foreign currencies off-exchange and at retail. The statement also alleges that the company claimed that it would use margin, funding and/or leverage in its trading activities.

“The defendants engaged in an international fraudulent multi-level marketing scheme through various websites, in addition to social media, to solicit Bitcoins from members of the public to participate in their pool.

At least 23,000 of the participants in the pool — most, if not all of whom, were not eligible contract participants — were from the United States.

The CTFC alleges that instead of exchanging funds on exchange platforms, the defendants instead defrauded investors by embezzling their funds and operating a Ponzi scheme.

“The defendants misappropriated pool funds, misrepresented their transactions and performance, provided fictitious account statements and created a fictitious broker at which the transactions allegedly took place and generally operated the pool as a Ponzi scheme.

In fact, what little trade the defendants did was not profitable, and they embezzled almost all of the at least 29,421 accepted bitcoins from the participants.

The lawsuit marks the largest Bitcoin trading system ever prosecuted by the CTFC, according to the statement.

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Featured image: Shutterstock/sdecoret/Konstantin Faraktinov