In the realm of digital currencies, cryptocurrency scams continue to be a huge issue, with con artists preying on investors to earn a fast profit. Recently, one of these frauds came to light, leading to a record-breaking $3.4 billion fine for a South African businessman.
To get bitcoin from the general public, Cornelius Johannes Steynberg, the founder and CEO of Mirror Trading International (MTI), engaged in a multilevel marketing scheme. He had to pay a $1.7 billion fine as well as $1.7 billion in reparations to victims who had been cheated, including Americans. The Commodity Futures Trading Commission (CFTC) has never imposed a civil monetary penalty as big as this one.
The CFTC discovered that Steynberg and MTI participated in an international deceptive multilevel marketing scheme to entice people to donate bitcoin in exchange for joining a commodity pool run by MTI. The pool reportedly used leverage, margin, and funding using a custom software application to participate in retail off-exchange FX trading.
Steynberg was not registered as an associated person of a commodity pool as required by federal law, and MTI had never been registered with the CFTC in any capacity despite accepting over 29,421 bitcoin (worth approximately $1.7 billion at the end of the relevant period) from at least 23,000 U.S. participants and even more globally. Steynberg and MTI were accused by the CFTC of misappropriating all of the Bitcoin they received from pool members.
Although the CFTC fined Steynberg a record amount, it is unclear whether the victims of the scam will receive any compensation. The incident serves as a reminder to investors to exercise caution when making Bitcoin investments and to perform due research before handing over money to any organization or person.
Investors should be on the lookout for several potential cryptocurrency frauds in addition to this one. One recent example of this type of fraud is BERRY Exchange, a purported cryptocurrency that guarantees significant returns on investment.
However, upon closer inspection, it becomes clear that BERRY Exchange is nothing more than a scam. The company's claims of having created a new cryptocurrency that will be worth millions are unsupported by any evidence, and the company's website is riddled with spelling errors and other red flags.
Furthermore, the company's social media accounts appear to be fake, with many fake followers and little engagement. There is also no clear leadership or organizational structure, and the company's website provides no information about the people behind the company.
Investors should be wary of any investment opportunity that promises high returns without any evidence to back up those claims. It is essential to do your research and be cautious, and not let promises of high returns cloud your judgment. Scams like these are unfortunately all too common, and it's up to investors to protect themselves from fraudsters looking to take advantage of them.
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