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Where is Johann? Panama, Brazil, South America? There is much speculation about the whereabouts of the founder and CEO of the bitcoin trading group Mirror Trading International (MTI), Johann Steynberg, who apparently left the country on December 3, 2020 and has not been seen since.
According to a statement issued by MTI management on December 19, he remained in contact with them until about a week ago and then apparently disconnected from the network and has not been contactable since then.
Several months ago, the Financial Sector Conduct Authority (FSCA) issued a warning to the public to stay away from MTI, which promised returns of up to 10% a month using a computerized trading algorithm that was said to have lost only a day out of 200.
To participate in the scheme, members had to buy bitcoin and send it to a wallet apparently controlled by Steynberg.
Despite the adverse publicity, the membership of the MTI appears to have increased. Last week, MTI marketing executive Cheri Marks told Moneyweb that the company had 280,000 members. In October, the amount of bitcoins allegedly under MTI’s control was 17,000, which would have a current value of about R5.6 billion.
On Monday, MTI’s legal representative, Ulrich Roux & Associates, withdrew as registered attorneys for the group. In a letter describing the reasons for the withdrawal, the law firm states: “We have recently learned that the CEO of Mirror Trading International, Mr. Johann Steynberg, is no longer in South Africa and that the remaining members of the MTI The management team has no way of contacting Steynberg. In addition to this, we have been informed that MTI members are not receiving their withdrawals, as they have in the past. ”
The letter goes on to say that Ulrich Roux & Associates has been in contact with the FSCA “and will continue to provide assistance and cooperation to the FSCA in connection with its ongoing investigation into MTI, subject to the parameters of legally inside information.”
The law firm says it cannot provide any clarity regarding the investments of MTI members as this was not part of its mandate “and we are not aware of it.”
The firm was hired by MTI in April 2020 with a mandate to assist in legal compliance in terms of the Companies Law; legal assistance in the drafting of contracts and general litigation; and legal representation related to correspondence received and interaction with the FSCA.
Interested members
Social media has been filled with comments about the latest developments, and members are understandably concerned about the fate of their investments.
Brandon Topham, head of investigations and compliance at the FSCA, says he has been inundated with inquiries from MTI investors from as far away as the Netherlands, asking for clarity on the status of the investigation and the likelihood of recouping some of their investment. .
“The problem we have, and which we alerted the public to several months ago, is that once you hand over your bitcoin to someone else, it is out of your control. I wish people had listened to our warnings to get their money out several months ago. ”
Things started to go pear-shaped for MTI in October this year when the FSCA launched a search and seizure raid on MTI’s offices and the homes of some of its executives, seizing various phones and electronic devices.
As Moneyweb reported last week, the FSCA has opened a criminal case against MTI and provided more details about its ongoing investigation into the company. “The authority [FSCA] believes that MTI and its senior management are conducting an illegal operation, misleading customers and have violated various laws, ”says the FSCA statement.
Read: FSCA opens criminal case against MTI, says investigation is ‘almost complete’
MTI maintained at all times that it was not under the jurisdiction of the FSCA and did not need a financial services provider license. The FSCA said this was not true, as the bitcoin allegedly traded by the company was in the form of derivatives, which placed it under the authority’s jurisdiction. “We have found no evidence that any crypto trading is taking place as reported to MTI members,” reads the FSCA statement issued last week.
MTI originally claimed to be trading forex through a Belize-based broker called FXChoice, although the FSCA investigation found that this represented a relatively small amount of bitcoin (1846 bitcoin, which is a little over 10% of total bitcoins alleged to be under MTI Control). Approximately 30% of FXChoice’s capital was lost over a period of just over four months this year. When clients requested account statements, they were provided with a demo rather than actual business accounts, issued by MTI.
MTI then says it switched to trading bitcoins instead of forex within days, and statements from members show that daily returns kept coming in as before – a track record that many believe was suspect, if not impossible.
FXChoice froze the rest of the MTI-pegged crypto assets, which then allegedly began trading through a different broker, Trade300. The only evidence of the existence of this broker was a website that was “under maintenance” and linked to the name Joe Steyn, a known alias of Johann Steynberg, according to the FSCA.
MTI’s astonishing success in building a network of hundreds of thousands of investors was due in large part to its referral marketing scheme, where members who introduce new clients earn generous bonuses.
Various SA crypto exchanges have had to deal with the MTI phenomenon. The only way to invest in MTI is with bitcoin, rather than cash. Lured by the promise of returns of up to 10% per month, there are stories of retirees charging pension funds to invest in MTI. To acquire bitcoins, they would have to do so on one of SA’s crypto exchanges, which several months ago began questioning new clients who plan to acquire cryptocurrencies for the sole purpose of investing in MTI. The exchanges told Moneyweb that they tried to alert the public to the potential dangers of a scheme that seemed too good to be true.
Several MTI members who wrote to Moneyweb believe that the FSCA is in unjustified revenge against MTI and cryptocurrencies in general.
To which Topham responds: “There is an old saying that if something seems too good to be true, it probably is.”
MTI members brandished daily reporting statements showing gains of 0.2% to more than 1% per day. The FSCA believes that these statements are nothing more than “hidden” or false accounts intended to keep members happy. It has been able to trace the whereabouts of some of the bitcoin wallets controlled by MTI, but not all.
The irony is that those who bought and held bitcoins in their own wallets would have made a whopping 200% in 2020, without having to hand over their bitcoins for anyone to manage on their behalf.
In recent weeks, MTI members reported difficulties in making withdrawals. MTI said this was partly due to the FSCA raid, which resulted in the broker restricting recall volumes and various technical issues.
Moneyweb was unable to reach MTI for comment at time of publication.
Listen to Ciaran Ryan’s November interview with Brandon Topham, FSCA Chief Compliance Officer:
