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CFTC wins a record $3.4B penalty payment in a Bitcoin-related fraud case

  • This is the largest fraud case involving Bitcoin that CFTC has cracked so far.
  • The case involved the CEO of Mirror Trading International Proprietary Limited (MTI).
  • Half of the $3.4B will go toward providing restitution to victims of MTI’s fraudulent activities.

A Texas court has ordered Johannes Steynberg, the CEO of Mirror Trading International Proprietary Limited (MTI) to pay a $3.4 billion penalty in connection with a large-scale fraud case involving Bitcoin.

According to the CFTC allegations, Steynberg engaged in an international fraudulent multilevel marketing scheme (MLM) to ask for bitcoins from the public for an unregistered commodity pool operated by the South Africa-based company MTI.

Steynberg who was controlling MTI and the company falsely claimed to trade off-exchange retail forex through a proprietary “bot” or software program between May 2018 and approximately March 2021.

The final judgment read:

“Either directly or indirectly, the defendants misappropriated all of the Bitcoin they accepted from pool participants.”

According to the CFTC Steynberg, individually and as the principal and agent of MTI, accepted at least 29,421 bitcoins, valued at over $1.7 billion at the time. The bitcoin was obtained from at least 23,000 individuals in the US and other countries around the world. The individuals were tricked to participate in the commodity pool although MTI was not registered as a commodity pool operator (CPO), as required by the law.

Steynberg arrest

Steynberg was arrested in December 2021 and has been held in Brazil on an Interpol arrest warrant since then.

Besides the recent charges against him by the CFTC, Steynberg is also permanently banned from registering with the CFTC or trading in any CFTC-regulated markets.

Restituting MTI’s victims

Half of the $3.4 billion penalty will go towards providing restitution to the victims of MTI’s fraudulent activities. The other half is a civil penalty, which is the highest civil penalty to be ordered in any CFTC case.

The CFTC has however conceded that “orders requiring payment of funds to victims may not result in the recovery of any money lost because wrongdoers may not have sufficient funds or assets.”

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Binance set to begin operations in Japan in two months’ time

  • Japan’s financial authorities had issued a warning that Binance was operating in the country without permission.
  • Binance acquired Sakura Exchange BitCoin (SEBC) in November 2022.
  • Existing services on SEBC will be terminated for new service under the provisional name “Binance Japan” to be issued.

As Binance continues to expand its business in Asia, it is set to begin operations in Japan in June according to a notice published by the exchange on Friday.

At the moment, Binance is the largest cryptocurrency exchange in the world by market capitalization even after the recent crackdown on its US arm, Binance.US, by authorities in the United States. It is set to use the recently acquired Japanese crypto exchange called Sakura Exchange BitCoin (SEBC) to offer crypto services in the Japanese market.

Launch of Binance Japan

Binance has been working to restructure the SEBC exchange and the existing services on SEBC are scheduled for termination on May 31, 2023, after which the exchange will be renamed “Binance Japan.”

The new Binance Japan is scheduled to start operations after June 2023 according to the notice issued by the Japanese branch of Binance.

Listing cryptocurrencies on crypto exchanges in Japan requires vetting by the Japan Virtual Currency Exchange Association and the SEBC exchange currently supports 11 cryptocurrency trading pairs.

Japan’s crypto exchanges regulations

Japan has a high regulatory standard for crypto exchanges which requires the segregation of customer and exchange assets. The regulations also require that most of an exchange’s assets be kept in cold wallets and customers’ fiat funds to be kept by a Japanese trust company or bank trust.

In 2021, Japan’s financial authorities issued a warning that Binance was operating in the country without permission prompting Binance to look for a local cryptocurrency exchange. With the complete rebranding of the SEBC, Binance will gain full regulatory status in Japan.

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CAKE down 21% as PancakeSwap mulls slashing staking rewards

  • PancakeSwap is a decentralized exchange (DEX) built on the BNB Chain.
  • PancakeSwap (CAKE) has dropped by 21% over the last seven days.
  • The DEX’s core team introduced a proposal to reduce the token’s inflation rate to 3-5%.

PancakeSwap’s native token, CAKE, has declined by about 21% in the last seven days and 27% in the last 14 days despite PancakeSwap’s core team introducing a proposal to reduce the token’s inflation rate to 3-5% from the current rates above 20%.

While the crypto market suffered from the recent bear market across the board, the CAKE token was expected to ride on the proposed inflation-reducing proposal rather than drop. On the contrary, the token has been dropping as stakers move out in numbers.

At press time, CAKE was trading at $2.66, up 1.6% over the last 24 hours.

Reducing PancakeSwap token inflation rate

PancakeSwap recently forked Uniswap V3’s code and launched its version on Aptos and Ethereum. The project’s core team has also introduced a proposal to reduce the native token’s inflation rate to 3-5% from the current rates above 20%.

If the proposal is passed, it will see the amount of tokens that stakers earn lowered something that could be the reason behind the recent exodus of stakers from PancakeSwap.

But why should the team suggest a proposal that is detrimental to the project’s ecosystem? Well, the proposal reads:

“Current inflation rates are unsustainable for CAKE over the long term, and reductions are required for the long-term health of PancakeSwap.”

Voting on the proposal already began on April 26 and it is scheduled to end today April 28. So far, the numbers show that the community is in support of the aggressive proposal. 55.43% have voted for the proposal compared to only 8.10% who have voted against the proposal although the voting process is still open.

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