The Commodity Futures Trading Commission (CFTC) filed a lawsuit on June 30th against Mirror Trading International (MTI) and its CEO, Johann Steynberg, alleging the company operated a $1.7 billion Ponzi scheme. The regulator claims Steynberg and accomplices defrauded at least 23,000 U.S. investors, who collectively lost approximately 29,421 bitcoin valued at $1.7 billion at the time of the investigation.

MTI’s fraudulent operation involved two distinct phases. Initially, the company promoted a supposed forex trading bot. When that venture failed, it pivoted to a bitcoin trading bot. The CFTC asserts no such trading bots were ever in operation. Instead, Steynberg and associates, identified as Clynton and Cheri Marks, allegedly siphoned off investor funds for personal gain.

The lawsuit details how Steynberg, acting as MTI’s agent, made fraudulent omissions to investors. These omissions included failing to disclose that pool funds were misappropriated, that no successful trading bot existed, and that profitable trading did not occur on behalf of participants. Investors were allegedly provided with fabricated "account statements" generated from simulated trades on "demo" accounts through the MetaTrader 4 (MT4) platform.

Furthermore, the CFTC claims that purported "returns" paid to some investors were actually the principal deposits of other participants, a hallmark of a Ponzi scheme. The online broker Trade300, where MTI purportedly traded participant bitcoin, is also alleged to be a fictitious entity created by Steynberg to facilitate the fraud.

The defendants are accused of pocketing the majority of the 27,574 bitcoin received from participants. A small portion of these funds was allegedly used to maintain MTI’s operations, including payments to top recruiters and limited payouts to investors. The CFTC noted that the defendants failed to deposit the 27,574 bitcoin into the designated Pool account at FXChoice. Limited trading activity at FXChoice resulted in overall losses, with the remaining bitcoin allegedly misappropriated by the defendants.

By soliciting investments from U.S. residents for a forex-related scheme without registering with the CFTC, Steynberg and MTI are alleged to have violated the Commodity Exchange Act. Following MTI’s collapse in late 2020, Steynberg reportedly fled South Africa for Brazil, leaving behind his wife and child. He was arrested in January 2022 on an Interpol notice.