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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 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.
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.”
In a recent report, the IMF praises the way El Salvador handled the COVID-19 situation and announces that their economy grew 10% in 2021. The International Monetary Fund also recognizes El Salvador’s government efforts to reduce crime, “diversify the energy matrix, foster economic diversification, and enhance financial inclusion.” However, when it comes to Bitcoin, the IMF is completely against it. As they should. Because Bitcoin renders the IMF irrelevant.
But first, let’s learn what the report titled “El Salvador: Staff Concluding Statement of the 2021 Article IV Mission” is about:
“A Concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country. Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF’s Articles of Agreement.”
Anyway, let’s go to the IMF’s wacky opinions about Bitcoin.
BTC price chart for 11/23/2021 on Oanda | Source: BTC/USD on TradingView.com
After praising El Salvador’s efforts to foster “financial inclusion and raise growth,” the IMF attacks the very tool that the country’s government is using to accomplish that.
“Given Bitcoin’s high price volatility, its use as a legal tender entails significant risks to consumer protection, financial integrity, and financial stability. Its use also gives rise to fiscal contingent liabilities. Because of those risks, Bitcoin should not be used as a legal tender. Staff recommends narrowing the scope of the Bitcoin law and urges strengthening the regulation and supervision of the new payment ecosystem.”
Translation: The IMF can’t even think of one good reason for Bitcoin not to be legal tender. One Bitcoin is one Bitcoin. The cryptocurrency’s volatility is intrinsically related to the assets we compare it with. In this case, the US Dollar. It’s also important to remember that Bitcoin is legal tender in El Salvador ALONGSIDE the US Dollar. If people don’t want volatility, they can easily exchange all of their money into the other currency considered legal tender.
The IMF also conveniently ignores the fact that Bitcoin’s volatility can bring positive results for its users. And that their other option, the US Dollar, is going through an inflationary period like no other. Plus, when the US government prints more money, its citizens get certain benefits out of it. But El Salvador doesn’t. A Dollarized country that’s not in control of the money printer gets its purchasing power decreased by relentless inflation, but doesn’t get the airdrops and inorganic money artificially stimulating the economy.
Of course, they do. First, they praise El Salvador’s efforts in financial inclusion. Then, the IMF recommends implementing the exact same measures that keep 70% of their population out of the financial system.
“Stronger regulation and oversight of the new payment ecosystem should be immediately implemented for consumer protection, anti-money laundering and counter financing of terrorism (AML/CFT), and risk management.”
Why are people in El Salvador unbanked? Do they think it’s by choice? Is the IMF unaware that their outdated and inefficient methods cause the bottleneck? Bad actors have incentives to bypass AML and KYC procedures. They do it with ease. Normal people can’t produce all those documents. And for banks, the cost of processing all that data makes acquiring a new client expensive. There are no incentives to serve the lower-income population.
“Recently announced plans to use the proceeds of new sovereign bond issuances to invest in Bitcoin, and the implications of trading more broadly in Bitcoin, will require a very careful analysis of implications for, and potential risks to, financial stability.”
Translation: What’s all this about a Bitcoin City?!!!!! And they’re building a pet hospital?! ALERT! ALERT!
In semi-related news, Reuters informs that U.S. Chargé d’Affaires Jean Manes said in local TV that relationships between the two countries are on hold. “Obviously we’re on a bit of a pause because the government of El Salvador is not giving a signal that it has an interest in our relationship,” she said. “On behalf of the White House, the State Department, we’ve offered a bridge, and the (Salvadoran) government decided not to take it. As far as we’re concerned, we’re interested in having the best relationship with El Salvador.”
Sure, Manes. That sounds totally believable. Nothing suspicious here.
Featured Image: AbsolutVision on Pixabay | Charts by TradingView
Tesla CEO Elon Musk may have a role to play in dragging the price of Bitcoin down, hence, paving the way for the impairment loss suffered by the firm.
American electric vehicle and clean energy company, Tesla Inc (NASDAQ: TSLA) has posted its second-quarter earnings results in which it revealed a $23 million impairment loss in its Bitcoin holdings. The loss according to the Palo Alto firm caused a visible offset or drag in its operating income which nonetheless grew year on year.
Tesla is one of the major institutions with have a vocal and obvious backing for Bitcoin, a move that was marked by a $1.5 billion purchase of the premier digital currency back in February. The acquisition news was welcome by a 13% growth in the price of BTC, pushing the coin to a new all-time high (ATH) of $44,000 at the time.
Tesla sold off a portion of its Bitcoin holdings at the end of the first quarter to boost its revenue having made a net gain of $101 from the sale of the digital asset. With the upsurge in the price of Bitcoin in the first quarter, the total holdings of the automaker stood at $2.48 billion, pitching the firm as one of the institutional investors with the most profit margin on Bitcoin.
The price of Bitcoin has lost steam beginning in the second quarter, in what appears as profit-taking from both short-term and swing traders was met with a set of concerning fundamentals that pushed prices lower. At present, Bitcoin is changing hands at $37,288.36, down 2.51% in the past 24 hours according to CoinMarketCap. While Tesla is still in profit generally, the firm does not account for Bitcoin as a mark-to-market asset, meaning that the monetary value of the holdings can only be profiled until a sell-off is made.
The $23 million impairment loss recorded is thus based on the premise that the company’s BTC holdings are seen as an inventory asset and using the GAAP provisions, it is its lowest value for the quarter that was factored in the firm’s operating income estimations.
Tesla Chief Executive Officer Elon Musk may have a role to play in dragging the price of Bitcoin down, hence, paving the way for the impairment loss suffered by the firm. Elon Musk championed the criticism of Bitcoin mining’s energy usage, stirring a massive Fear, Uncertainty, and Doubt (FUD) amongst Bitcoin investors across the board.
Per the position, Musk maintained, Tesla chose to halt its plans to accept Bitcoin as payment for its products until there is good progress in the shift towards more sustainable and green energy options. This, coupled with a determined move by China in clamping down on all crypto-related activities has contributed to keeping Bitcoin and altcoin prices below their all-time highs.
While Elon Musk received a tag as both a friend and foe in the crypto ecosystem for price manipulation, he recently unveiled his private venture SpaceX also has a Bitcoin holding and that BTC’s energy usage is improving and Tesla may resume accepting Bitcoin once again.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.