MIRROR, MIRROR ON THE WALL ...

Johann Steynberg, the founder of Mirror Trading International, says 50,000 South Africans ‘invested’ in his get-rich-quick scheme. It seems destined to end in tears

There’s nothing like an economic crisis to bring out the chancers, seeking to convince you that while the world is melting down, you can get rich overnight. Take Mirror Trading International (MTI), started by Polokwane computer programmer Johann Steynberg, which has the least convincing business model this side of the radical economic transformation magic money tree.

And yet, implausibly, Steynberg has apparently signed up 130,000 people in 190 countries — and 50,000 South Africans.

Some schlenters, like Steinhoff, are a well-disguised sleight of hand. MTI isn’t one of them. It becomes clear right off the bat how implausible it seems, as MTI’S website vows that “no trading knowledge is required” to make a fortune.

The way it works is you “invest” at least $100 into bitcoin, which goes into a “trading pool” used to finance a series of forex and crypto trades, made using an “exclusively contracted” artificial intelligence software. Then, MTI says, “sit back, relax and watch your bitcoin grow daily”.

Were this a game of buzzword bingo, you’d already be a winner, what with “crypto”, “artificial intelligence” and “forex trading” all in one. Sadly, real money is involved — R2.9bn, if MTI is right that its pool consists of 13,000 bitcoins.

What has lured investors is Steynberg’s claim that since it started just more than a year ago, there has been an “average daily profit of 0.4%”. In just eight months, for example, it says investors earned an eye-popping 141% return on their money.

Alarm bells should be ringing. How is it that a computer programmer, who has dabbled with a variety of get-richquick schemes, can so profoundly outperform seasoned investment professionals? Why, as website Stealthy Wealth put it, would he not just use this “system” for himself?

Nor does it end there: MTI also offers a multilevel marketing option (read: pyramid scheme) where it “rewards members” for selling the scheme — up to 10% per referral.

In an interview with the FM, Steynberg is adamant it’s all above board. “We operate legally in SA, and there is no place on our website where we promise anything,” he says.

Really? How about where it promises “your bitcoin will be growing”? The truth is MTI fails the first rule of investment: if it sounds too good to be true, it usually is. Yet the way Steynberg tells it, MTI has made “on average, over the past 12 months, an 8% to 10% gain per month”.

It means that “each and every investor has made money, and can withdraw whenever they like”.

How can such a one-way bet be possible?

Steynberg replies: “On average, we make 500 trades every day, and there are hundreds of losses in there … but we’ve only ever made a loss in one full day of trading, on July 7, when we closed the day at a loss of -0.0373%.”

So MTI has only ever made a loss on one day of trading? How can this be, given that bitcoin’s price gyrates wildly — from $18,984 in December 2017, before plunging to $3,200 within a year? And back to $12,000 today?

Steynberg’s answer is that “we don’t just trade in cryptocurrencies — we also trade the forex markets”.

Still, what foresight could lead MTI to always call currency movements and crypto prices correctly, every single day?

But investors are exposed, as MTI isn’t registered with the regulator, the Financial Sector Conduct Authority (FSCA). Its argument is that the FSCA has no oversight of bitcoin. But the regulator does have oversight of forex trading.

Steynberg says: “We are in negotiations with it — we have a different opinion on what jurisdiction it has.” But, he says, MTI is changing its policy to only trade in crypto currencies “until we possibly get licensed, to move back into forex”.

FSCA head of enforcement Brandon Topham tells the FM it is investigating MTI. In a hard-hitting statement he says MTI’S returns seem “far-fetched and unrealistic”, while it “is not licensed to conduct the proclaimed business it is conducting”. More alarming, he says the FSCA has “not been able to conclusively confirm” that the R2,9bn in clients’ funds exist. “We will involve the police if the discrepancies are confirmed.”

Last month the Texas branch of the US regulator, the Securities & Exchange Commission (SEC), sent a “cease and desist” letter to MTI’S Texas-based promoters, describing the scheme’s claims as “materially misleading”.

The SEC says that for MTI’S projections of returns of 10% per month to be true, the price of one bitcoin will have to rise from less than $10,000 to $34,209 within a year, and to $6.6m within five years. Plainly, no-one can promise that.

Two weeks ago, MTI’S broker, Fxchoice, froze the account. Intriguingly, Fxchoice said that from what it could see, MTI executed “just a few trading operations … and incurred substantial losses”. So much for always making money ...

And Fxchoice warned: “Paying out such a consistent stream of profits, which is nearly a 100% return on investment in one year to investors by trading forex, is hard to believe.”

Asked about this, Steynberg’s answer is: “We have more than one broker — it’s not just Fxchoice.” If so, he ought to publicly reveal all the trades, and submit to a proper audit. He tells the FM that MTI has appointed an auditor, and “we will have those reports available when they are due”.

Of course, Steynberg’s personal history, as one of the promoters of a failed pyramid scheme called Kipi, doesn’t help.

Nor does the fact that he won’t reveal the full details of the trades because “our trade secret is our bot”. He tells the FM: “we will not be making that public as I am sure you’d agree that would expose our product to be copied”.

This lack of transparency over the trades is problematic for a company that claims to have only ever had a single day of losses. This is why Just One Lap’s founder, Simon Brown, bluntly says: “Mirror Trading is a scam.”

If so, it’s almost as cynical as politicians ripping off the public with Covid-19 tenders.

For MTI’S projections to be true, the price of one bitcoin will have to rise to $6.6m within five years