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The Cape High Court placed the Mirror Trading International (MTI) bitcoin investment scheme in provisional liquidation on Tuesday (December 29).
The court order orders the bailiff to seize all assets that appear to belong to the MTI in all provinces and present an inventory to the Cape Superior Court magistrate.
No one from the MTI appeared in court to defend the action.
A group called the Recovery Action Group (RAG) was hastily convened in recent days to represent as many of the estimated 280,000 members as possible to speak with one voice before the court and regulators.
There was fear that various liquidators were circling the MTI in order to feast on his corpse, but in the end, the court granted the provisional liquidation order to MTI member Anton Lee, who had tried unsuccessfully to remove company funds since December 21.
Trades tracking
An interim liquidator will be appointed in the coming days to begin the mammoth task of tracking the assets of MTI’s top management and leaders.
Moneyweb has been inundated with emails from members as far away as the US, Canada and Mexico requesting news about the fate of their investments.
Advocate Vaughn Victor, a cybersecurity and crypto expert who is part of the team representing Lee, says it now appears that investors sent approximately 23,000 bitcoins (worth R9.45 billion at current prices) to MTI.
Most of this was done in the past seven months, long after the Financial Sector Conduct Authority (FSCA) issued warnings to the public to stay away from the company that was attracting investors from around the world with promises of investment. returns of up to 10% per year. month.
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At this stage, it is unknown how much of this bitcoin remains under the control of MTI’s senior managers, although Victor says his team has been able to track around 7000 bitcoins in wallets under the direct control of MTI’s founder and CEO, Johann Steynberg. (worth around $ 900 million at current prices)
Liquidators are unlikely to get back anything like 23,000 bitcoins, as many believe that the profits and bonuses paid to members come from incoming bitcoins from new members.
Where is Steynberg?
Like Moneyweb above reported, Steynberg disappeared in early December and is believed to be in hiding in Brazil. It was around this time that members began to notice that their withdrawal requests were unanswered.
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“We have put the wallet watchers on all bitcoin under the control of Steynberg and other senior managers at MTI and will now begin the process of contacting international authorities, including Interpol, to freeze the movement of these assets,” says Victor.
Victor is also involved in the forensic investigation of BTC Global, another bitcoin investment scheme that promises returns of around 14% a week, which caught fire two years ago.
“Many of the same people involved in MTI also participated in BTC Global,” says Victor.
FSCA raid
MTI began to run into trouble in October following a search and seizure raid by the FSCA, which recovered phones and electronic devices from MTI’s Stellenbosch headquarters and the homes of some of its executives.
Read: MTI Plans Counterclaim Following FSCA Raid on Executive Homes and Offices (Oct 28)
The FSCA warned the public that MTI was trading without a financial services provider license and was making outlandish claims to attract new members.
MTI maintained that he was not under the jurisdiction of the FSCA and was being victimized by the authority.
MTI told its members that it could generate returns of up to 10% a month using a computerized algorithm, but when the FSCA investigated, it found no evidence of commercial success.
Until a few months ago, MTI traded forex through a Belize-based broker called FXChoice, and lost roughly 30% of 1846 bitcoins on deposit with the broker over a four-month period. Members were shown a demo in lieu of actual trading accounts, issued by MTI, prompting FXChoice to freeze the rest of the bitcoin pegged to MTI.
Regulators worry
MTI then began to draw the attention of financial authorities in the US, Canada, and South Africa, and allegedly switched to trading bitcoins instead of forex on the grounds that this would prevent regulators from interfering with its business. He claimed to be doing this through a new broker called Trade300, but the FSCA found no evidence that this broker existed. All he found was a website “under maintenance”, registered to Joe Steyn, a known alias of Johan Steynberg.
Speaking in a RAG online meeting Over the weekend, attorney Hendrik van Staden said four steps must now be taken to secure members’ remaining assets:
- Obtain a provisional liquidation from MTI to ensure the goods that were entrusted to the company and prevent them from being sent to third parties.
- Once the amount of assets is established, it will be determined whether MTI can address the claims against you before the “return date” (March 1, 2021, per the Cape Superior Court order) and if there is any reason not grant settlement.
- Liquidators will seek extended powers of the court to take full control of assets and determine where other bitcoins may have been hidden.
- If MTI is unable to reimburse the claims against it, the liquidators will apply to the court for a final liquidation order, at which point the proceeds from the assets will be sold and returned to the members, once the settlement costs have been satisfied. .
Van Staden also noted that those who received more than they paid at MTI may be asked to return or contribute to the liquidated estate.
This will deal a severe blow to the thousands of people who made huge commissions for introducing new members to the plan.
The South African Revenue Service (Sars) has also received a copy of the Cape High Court order, and will no doubt be on standby to collect its share of the unreported earnings generated through the MTI scheme.
