If you were trading Forex or crypto back in 2018, you might remember hearing about a new trading platform called Mirror Trading International (MTI).
At the time, MTI was a big deal, and for a lot of traders, it seemed like this platform was ushering in a bold new future.
But it turned out that MTI's promises were lies, and founder Cornelius Johannes Steynberg was nothing more than an ambitious thief.
While Steynberg succeeded with his scam at first, eventually, the law caught up with him. In 2023, he was ordered to pay an astonishing $3.4 billion fine by a Texas court. Let's learn more about the story of Steynberg and MTI.
Mirror Trading International (MTI) — nothing but smoke and mirrors
Steynberg, a resident of South Africa, created Mirror Trading International (MTI) in May 2018. He promoted his new trading platform online, particularly on social media. Over time, he drew in more than 260,000 customers from 140 countries, who were excited by the supposedly cutting-edge machine learning technology he claimed to be using.
That meant that at that time, MTI was among the top-growing crypto trading platforms worldwide.
Steynberg told his customers that they could expect around 10% returns per month on average from his AI trading bots. They believed him.
You can see a screenshot from the archived version of the MTI website touting their prowess in trading:
He claimed to be using a third-party brokerage firm called Trade 300. Investigators would later discover that Steynberg owned and operated Trade 300 himself.
For the next two years, Steynberg would operate his fraudulent trading platform as a Ponzi scheme without anyone noticing.
In July 2020, the Texas State Securities Board (TSSB) became suspicious of MTI, and issued a cease-and-desist order. A lot of traders tried to pull out at that point. MTI continued to conduct business as usual, but held up payouts.
At this point, traders began to panic, and rightly so; MTI did not want them to be able to withdraw their funds. A South African hacker group called Anonymous ZA decided it was time for action. In September 2020, they hacked MTI and uncovered the inner workings of the Ponzi scheme.
The whole time the scheme was running, participants were receiving statements showing investment gains in their accounts. But these statements were completely falsified. By the time the scam was shut down, investors had been robbed of over $1.7 billion collectively.
Just a month after the hacker group uncovered the Ponzi scheme, the Financial Sector Conduct Authority (FSCA), a South African regulator, raided MTI executives' homes. While there, they confiscated electronic devices for further investigation.
During these events, Steynberg had remained in South Africa. But in November, he was tipped off by an unknown source that the FSCA planned to come directly for him. On December 2, he escaped across international borders, disappearing for an entire year.
Steynberg caught at last
What happened to MTI in Steynberg's absence? The investors he had defrauded were unable to get their money back, because he had taken it all with him when he fled. He took the additional step of blocking his own staff from accessing the company's South African bank account.
Initially, Steynberg did a pretty good job of laying low and eluding authorities, staying in a hotel in São Paulo. But like many scammers, he was unable to resist the allure of a more extravagant lifestyle.
After relocating to Goiás (a state in Brazil), he applied for half a dozen credit cards. He also acquired a number of new vehicles (some sources say he bought a jet, while others state that he flew in a helicopter). Having left his wife behind in South Africa, he found two new girlfriends (Adriele Cristiana Rodrigues Alencar, followed by Karine Amelya de Andrade dos Santos), on whom he also spent lavishly. He did all of this under multiple fake identities, including:
- "John"
- Cleisson Veira da Silveira
- Edson Pereira de Almeida
Eventually, someone realized his ID was fake, and reported it to the Brazilian authorities.
Captain Jonathan Andrade and his team arrested Steynberg on January 13, 2022. Andrade reported:
[Steynberg] was sent to the Federal Police Station, and then other international institutions contacted us, like the FBI. He will probably be charged in Brazil for using false documents used to make a new identity; then the Federal Police will possibly send him for extradition.
A record penalty in the US
Steynberg ended up facing consequences for his actions in multiple countries. Let's start with the US.
The Commodity Futures Trading Commission (CFTC) announced the following in a press release on April 27, 2023 titled "Federal Court Orders South African CEO to Pay Over $3.4 Billion for Forex Fraud" (emphasis ours):
The Commodity Futures Trading Commission today announced Judge Lee Yeakel of the U.S. District Court for the Western District of Texas entered an order of default judgment and permanent injunction against Cornelius Johannes Steynberg of Stellenbosch, Western Cape, Republic of South Africa. The order requires Steynberg to pay $1,733,838,372 in restitution to defrauded victims and a $1,733,838,372 civil monetary penalty, which is the highest civil monetary penalty ordered in any CFTC case. This action is also the largest fraudulent scheme involving Bitcoin charged in any CFTC case.
In the press release, the CFTC reports that an estimated 23,000 US citizens were defrauded through the Ponzi scheme, and that over the years MTI was operating, Steynberg extracted around 29,421 BTC from them. As of March 2021, the value for the BTC was estimated at more than $1,733,838,372 in US dollars.
Steynberg sentenced to modest fines in Brazil
Of course, it was not just the CFTC in the US that threw the book at Steynberg. Brazil's authorities were also not amused by his use of fake identities to conduct transactions on their soil.
In a Brazilian court of law, Steynberg was found guilty for forging his identity documents with aggravating circumstances. His sentence was three and a half years in prison, along with a fine amounting to 120 days of wages based on the minimum wage in Brazil when he was arrested. That comes out to 1,100 reais a month, which is equivalent to around $222 in US dollars per month.
It does not appear that Steynberg will be serving any time, however. As reported here in August 2023, "The Brazilian penal code states that jail sentences under four years for non-violent crimes may be converted into fines. The judge commuted Steynberg's prison time to a charitable donation of twenty months' wages, or roughly R85,000."
That is only around $4,459 in US dollars. That, of course, is just a slap on the wrist, especially when you compare it to the $1,733,838,372 + $1,733,838,372 in fines the Texas Court ordered him to pay.
That being said, it is understandable that the Brazilian court did not saddle Steynberg with a larger penalty. His crimes there (forging identity documents) simply were not as egregious as those the CFTC was pursuing him for (defrauding US investors out of $1,733,838,372).
Key takeaways from Steynberg's case
Steynberg ran what turned out to be the largest pyramid scheme in the history of South Africa.
It can be very challenging for investors to figure out when they are being duped by a clever scammer. Emotions run high with respect to trading, and many investors are willing to believe a lot of dodgy promises when they are desperate for returns.
But there were almost certainly red flags with MTI. From reports, it looks like Steynberg's promotional materials failed to use required disclosure language. Whether investors would know to look for that language or not is unclear. But this is a reminder that it is always wise to dig into whether the claims you are seeing for trading products are based on real or hypothetical outcomes.
Plus, when promotional materials do reference real outcomes from the past, they need to include language that reminds investors that past returns do not guarantee future results. If language like that is missing, and if someone is literally promising you certain returns (like the 10% MTI promised on average), you are looking at a scam.
Ask the hard questions about trading products, whether they are Forex or cryptocurrency related, no matter how exciting they appear to you, and be prepared to walk away in the face of unrealistic claims. If you are exercise caution, hopefully you will never be taken in by a Forex scammer like Cornelius Johannes Steynberg.
