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The Financial Sector Conduct Authority (FSCA) has opened a criminal case against Mirror Trading International, claiming that the company and its top management are conducting an illegal transaction, are deceptive customers and have broken various laws.
The FSCA also said that Mirror Trading International (MTI) is not licensed to offer financial services and has not applied for such a license.
News of the FSCA findings and the criminal complaint against MTI follows a warning from the regulator in August that people should withdraw their money from the scheme.
It also comes after a group calling itself AnonymousZA leaked a redacted version of the entire MTI database, including account balances, which provides information on how the plan was executed.
MTI and FXChoice
According to the FSCA, when MTI began trading in April 2019, it transferred members’ bitcoin, which had been deposited into their wallets, to a currency platform called FXChoice.
MTI’s Managing Director, Mr. Cornelius Johannes Steynberg, has actively assisted Mr. Clynton Hugh Marks and Ms. Cheri Marks in operations.
The FSCA said that Steynberg testified under oath that, from April 2019 to July 2019, members’ trading accounts were linked to an MTI-designated professional trader through a multi-account manager agreement linked to Meta Trader 4. Trading was carried out in derivative instruments based on currency pairs.
The FSCA reported that Steynberg stated that MTI experienced substantial losses of up to 80% during this period and, as a result, MTI requested its members to unlink their respective accounts from the multiple account manager account and move their bitcoins to a pooled account.
Steynberg claimed that since August 2019, MTI employed a bot (high frequency artificial intelligence trading) along with a main trader and a trading team to make all of their trading decisions, with great success.
“The Authority found evidence that contradicted this claim,” stated the FSCA.
Evidence contradicts MTI claims, FSCA claims
“During October 2020, after the FSCA informed MTI that it was conducting an illegal unregistered financial services business, MTI claimed that it changed its business activities to trade in derivatives based on cryptocurrencies (Bitcoin), from so that it was no longer within the jurisdiction of the FSCA, and no longer required a [financial services provider] license, ”reported the FSCA.
MTI’s statements that it no longer required an FSP license were incorrect, the FSCA said.
“Submissions received from Steynberg revealed that the cryptocurrency was allegedly being traded in the form of a derivative product, which would also have required registration with the FSCA,” the regulator said.
Crucially, the regulator said that it has found no evidence that cryptocurrency trading is actually taking place as communicated with MTI members.
The FSCA said it obtained evidence from FXChoice, MTI’s first “broker of choice,” which suggested that MTI had provided clients with falsified commercial statements.
The business statements provided by MTI to its clients were based on a demo business account and not actual transactions, the FSCA found.
As a result of inquiries it received from MTI clients and the discovery that MTI had passed off the demo account activity as live trading, FXChoice said it froze the balance of MTI-linked crypto assets on its platform.
“FXChoice confirmed that MTI placed 1,846.72 bitcoins from January 29, 2020 to June 3, 2020 and made a loss of 566.68 bitcoins, an approximate capital loss of 30%,” stated the FSCA.
“The total crypto assets frozen at FXChoice is a negligible amount, considering the total assets that MTI claimed to have invested on behalf of its clients,” said the FSCA.
Find trade300
The FSCA reported that Steynberg and MTI’s communications director Cheri Marks claimed that MTI’s business activities were shifted from FXChoice to Trade300.
“According to Steynberg, Trade300 is another online trading platform,” stated the FSCA.
He noted that at Trade300 MTI experienced the same extraordinary gains using the bot, but at this stage trading crypto derivatives.
Steynberg testified under oath and repeatedly in the press that bot trading averaged a return of 10% per month, and that MTI has never had a negative earnings trading day, except for one exception. Marks also repeatedly confirmed commercial successes on social media. “
The FSCA said it tried to trace Trade300 for a statement and trade details to verify MTI’s version of events.
“MTI did not provide any useful details that helped the FSCA,” the regulator stated.
According to the FSCA, it followed all possible links on the Internet to establish whether Trade300 existed. Could only find a reference to Trade300: your own website.
“The website was, and still is, ‘under maintenance’, and the only reference linked to the website is the name of ‘Joe Steyn’, a known alias of Steynberg,” said the FSCA.
“The FSCA obtained search and seizure warrants and executed them at the Steynberg and Marks homes, and at the MTI offices. On Steynberg’s desktop computer, the investigation team found evidence related to Trade300. Therefore, it appears that Trade 300 is linked to Steynberg. “
Following the money
As an additional effort to verify the evidence from MTI, Steynberg and Marks, the FSCA said it requested information from MTI regarding the transfer of assets from FXChoice clients to Trade300.
MTI provided evidence of the transfer in the form of Bitcoin wallets and stated that it transferred 16,444 bitcoins from FXChoice to Trade300 in four installments on July 21, 2020, July 22, 2020, and July 24, 2020.
However, the FSCA said that it found that there was no Bitcoin withdrawal by MTI from FXChoice in July 2020.
“The last bitcoin withdrawal by MTI from FXChoice was in August 2019,” the FSCA said.
FXChoice also confirmed to the FSCA that none of the eight sending wallets provided as evidence by MTI are related to FXChoice, and that FXChoice did not receive deposits or send any payments to any of these eight bitcoin wallets.
Further investigation of the wallets provided by MTI showed that their transaction activities do not resemble MTI’s alleged activities, the FSCA stated.
“We have found no evidence of any significant deposit of crypto assets on any trading platform, and that the majority of crypto balances appear in the name and under the control of Steynberg,” the FSCA reported.
“The amount of such balances is well below the balance announced on the MTI trading platform due to MTI investors.”
The FSCA said that in recent days it has received complaints that investors were unable to rescue their investments.
“The investigation is ongoing and the FSCA has opened a criminal case with the South African police services.”
MyBroadband contacted the MTI and FSCA for comment, but neither organization responded immediately.
FSCA statement
The full FSCA statement is included below.
Now read: Mirror Trading International’s offices were raided
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