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The Financial Services Conduct Authority (FSCA) raided the offices of a local cryptocurrency trading company on Monday.
The offices of Mirror Trading International (MTI), located in Polokwane, Stellenbosch and Durban, were raided by officials from the authority.
FSCA executive Brandon Topham says the raid is part of an ongoing investigation.
Mirror Trading International is a South African registered company that provides forex trading services by using an automated system to trade with the trading group on behalf of its members.
The FSCA announced in August that they would investigate the company as they believed their business model required that they hold a financial services provider license.
MTI accepts clients’ funds in the form of Bitcoin, pools the funds in a trading account on a currency derivatives trading platform, and performs high-frequency trades using a bot.
The FSCA says that if this is done as described, then it amounts to financial services, hence the licensing requirement.
However, the FSCA has a much greater concern for the activities of the company.
MTI claims to have more than R2.9 billion (at current conversion rates) in customer funds in business accounts, but the FSCA could not conclusively confirm that the funds exist.
Furthermore, the investment returns claimed by MTI appear implausible and unrealistic.
