![\"\"](\"https:\/\/www.innov8fs.co.za\/blog\/wp-content\/uploads\/2021\/01\/Mirror-Trading-International.jpg\")
<\/p>\n<\/p>\n
Every member of Mirror Trading International (MTI) who withdrew money from the scheme will have to pay the money back to liquidators, FSCA head of investigations and enforcement Brandon Topham has said.<\/p>\n
MTI was a scheme that claimed to offer automated forex and later cryptocurrency trading services.<\/p>\n
The company and its leadership claimed that MTI had a magical automated trading program \u2013 a \u201cbot\u201d powered by artificial intelligence \u2013 that could yield growth of 0.5% to 1.5% per day.<\/p>\n
Many people warned that the promised returns were too good to be true and that MTI was a scheme that will ultimately cost you money.<\/p>\n
The Financial Sector Conduct Authority (FSCA) even issued a warning in August last year that people should withdraw their money from the scheme.<\/p>\n
In late 2020 the scheme collapsed, as warned, with the MTI leadership blaming the company\u2019s CEO, Johann Steynberg, who disappeared in December.<\/p>\n
A group of members acted quickly and instituted liquidation proceedings against MTI within days of the announcement that Steynberg had gone missing.<\/p>\n
The Cape Town High Court granted a provisional liquidation on 29 December 2020.<\/p>\n
Members of the scheme may be in for a shock. Topham has stated that all MTI investors \u2013 even if they didn\u2019t make a profit from MTI \u2013 will be required to hand over any money they took out, including their original deposit.<\/p>\n
How exactly these repayments will work and when they will be demanded is up to the liquidators that have been appointed to the case. It is understood that repayments may be limited to funds that were withdrawn within a specific period of the scheme\u2019s operation.<\/p>\n
The provisional liquidators of MTI \u2013 AW van Rooyen, H Bester, Jacolien Frieda Barnard, and Deidre Basson \u2013 were appointed by the court on 12 January 2021.<\/p>\n
The provisional liquidators have now applied to the court to have their powers extended.<\/p>\n
Among other things, the liquidators are asking for the ability to subpoena people to answer questions in court where necessary.<\/p>\n
The provisional liquidation order will be made permanent on 1 March if it remains unopposed.<\/p>\n
The collapse of Mirror Trading International has evoked comparisons to the botched handling of Krion, a saga which played out over the better part of seventeen years.<\/p>\n
Krion was\u00a0declared<\/strong>\u00a0a Ponzi-type scheme by the High Court of South Africa in 2002. Around 14,000 investors and R1.5 billion were involved in the scheme.<\/p>\n Police\u00a0arrested<\/strong>\u00a0the mastermind behind Krion, Marietjie Prinsloo, on 23 July 2002 along with her family who were accused of perpetrating the scheme with her.<\/p>\n While Krion was liquidated on 4 June 2002, it took 11 years before the liquidators filed their first liquidation and distribution account.<\/p>\n The criminal case against Prinsloo and her co-conspirators was only\u00a0finalised<\/strong>\u00a0in 2015.<\/p>\n Business Day\u00a0reported<\/strong>\u00a0in 2013 that liquidators and other collectors had taken R84 million from the Krion estate over the course of 11 years, while only recovering around R100 million.<\/p>\n After paying the South African Revenue Service and other expenses, less than R10 million remained to repay investors the money they had lost in the scheme.<\/p>\n Citizen\u00a0reported<\/strong>\u00a0that liquidators also sued people who had invested in Krion to pay back any money they had received from the scheme, even if they hadn\u2019t actually made a profit.<\/p>\n It provided the example of one investor who had deposited R400,000 into Krion and received R220,000 from the scheme in \u201cprofits\u201d. She was sued for the R220,000 even though she had suffered a net loss.<\/p>\n Members bought into MTI with a minimum of $100 worth of bitcoin, or a minimum of $200 if they wanted to qualify for bonuses under the company\u2019s multilevel marketing system.<\/p>\n In August 2020, the Financial Services Conduct Authority of South Africa (FSCA) said that it was investigating MTI and warned investors that they should withdraw their funds.<\/p>\n Prior to that, the Texas State Securities Board\u00a0issued<\/strong>\u00a0an emergency cease-and-desist order against MTI and accused it of perpetrating fraud through an illegal international multilevel marketing programme.<\/p>\n Canada\u2019s Autorit\u00e9 des March\u00e9s Financiers (AMF) also placed MTI on its\u00a0list<\/strong>\u00a0of illegal online platforms, issuing a warning that MTI illegally solicits investors.<\/p>\n In September, MyBroadband reported on a group calling itself Anonymous ZA which leaked an anonymised copy of MTI\u2019s entire database \u2014 including account names, e-mail addresses and bitcoin balances. They called it the\u00a0MTILeaks<\/strong>.<\/p>\n The MTILeaks showed that as of 14 September 2020, MTI had received 22,984 bitcoin in deposits.<\/p>\n Before the surge in the price of bitcoin towards the end of 2020, this was worth around R6.4 billion. At current exchange rates this amount of bitcoin is worth around R13 billion.<\/p>\n Looking at the information from the MTILeaks and official \u201ctrading pool\u201d data from MTI itself, it stands to reason that the capital taken in by the scheme stood at well over 23,000 bitcoin before deposits were shut down in December.<\/p>\n On 26 October\u00a0the FSCA raided<\/strong>\u00a0the offices and homes of MTI leaders, seizing electronic and telephonic records from cell phones, notebooks, and PCs at the three locations.<\/p>\n On 12 November\u00a0the FSCA filed criminal fraud charges against MTI<\/strong>\u00a0with the South African Police Service in Stellenbosch.<\/p>\n On 7 December, MTI conducted what would turn out to be its final Q&A with its CEO, Johann Steynberg. During the Zoom call Steynberg stated that he is \u201con vacation\u201d. The call also ignited speculation, later backed up by photos of plane tickets, that Steynberg was in S\u00e3o Paulo, Brazil.<\/p>\n Brandon Topham of the FSCA has since stated that they uncovered evidence suggesting that Steynberg\u2019s destination was Panama.<\/p>\n On 18 December the FSCA issued a statement with some of its preliminary findings. This included the revelation that the \u201cunregulated broker\u201d that MTI claimed to be using for its bot\u2014 Trade300 \u2014 was just a website set up by Steynberg.<\/p>\n On 19 December, MTI management informed members that Steynberg went missing while travelling abroad. They also informed members that they received an automated emergency email stating that Steynberg had not logged into the MTI system for 12 hours.<\/p>\n \u201cThis security protocol email provided critical info for the team to start the process of working without Johann. (Up till that point Johann was the only one with authority to deal with the broker & technical team),\u201d the notice to members stated.<\/p>\n On 22 December the MTI leadership and management issued a statement which said that they do not know whether members\u2019 investments are safe.<\/p>\n They also claimed that they were unable to get members\u2019 bitcoin from their \u201cunregulated broker\u201d with which to pay withdrawals.<\/p>\n On 23 December, two applications for the provisional liquidation of MTI were filed in the Western Cape Hight Court. The first application, led by Advocate Vaughn Victor and Vezi & De Beer Inc., was granted on 29 December.<\/p>\n In January 2021 a video call of an emergency meeting between MTI leaders and management was\u00a0leaked on YouTube<\/strong>.<\/p>\n Based on the content of the call, it was held to discuss the statement that was issued on 22 December. MTI\u2019s leadership also discussed a plot to trick Steynberg\u2019s wife into selling silver holdings worth between a million and two million rand to pay an \u201cextraction team\u201d to locate Steynberg in Brazil and bring him back to South Africa.<\/p>\n Like many similar cryptocurrency \u201cinvestment\u201d scams, there were multiple red flags that should have scared investors away from Mirror Trading International.<\/p>\n If its contrived multilevel marketing bonus structure wasn\u2019t enough of a warning, its too-good-to-be-true growth rates should have been.<\/p>\n When something offers the equivalent of over 500% interest per annum, it\u2019s not only too good to be true, it also violates the Consumer Protection Act\u2019s prohibition on multiplication schemes.<\/p>\n Another important thing to understand when doing a basic rationality check on MTI\u2019s claims and sustainability is that only 21 million bitcoins will ever be created. To-date, around 18.6 million have been mined.<\/p>\n If MTI continued to grow at the rapid rate it was growing, it would eventually own every bitcoin in existence (or at least every bitcoin in circulation).<\/p>\n Taking the 23,000 bitcoin that was in MTI\u2019s \u201ctrading pool\u201d at its height, along with its 0.5% daily growth rate, it is possible to calculate (using the logarithm function) how long it would take for MTI to hit 21 million bitcoin \u2013 3.7 years.<\/p>\n It\u2019s important to note that this calculation assumes MTI members stopped putting more money into the scheme than would be withdrawn after 23,000 bitcoin.<\/p>\n As more money gets deposited, or the dubious \u201cAI trading bot\u201d earns more than 0.5% per day, the amount of time it takes to get to 21 million bitcoin decreases. At the rate it claimed to be growing, MTI would have consumed every bitcoin in existence in as little as two years.<\/p>\n","protected":false},"excerpt":{"rendered":" Every member of Mirror Trading International (MTI) who withdrew money from the scheme will have to pay the money back to liquidators, FSCA head of…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-600","post","type-post","status-publish","format-standard","hentry","category-innov8ions"],"_links":{"self":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/600","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/comments?post=600"}],"version-history":[{"count":3,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/600\/revisions"}],"predecessor-version":[{"id":604,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/600\/revisions\/604"}],"wp:attachment":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/media?parent=600"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/categories?post=600"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/tags?post=600"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}The collapse of Mirror Trading International<\/h3>\n
The many problems with Mirror Trading International<\/h3>\n