MTI hearing delayed
ON HOLD: THREE GROUPS BELIEVE FAILED BITCOIN SCHEME CAN BE SAVED
FSCA says it is impossible to salvage an unlawful scheme like this one.
The application for the final liquidation of Mirror Trading International (MTI) has been postponed until 31 May, apparently by groups who believe the company can still be saved.
Moneyweb understands three groups are opposing the final liquidation in favour of business rescue, alternatively that want to be allowed to restructure the company’s debts in terms of a Section 155 (of the Companies Act) compromise.
MTI was placed in provisional liquidation in December last year when investors tried without success to withdraw funds from the scheme, which was rated by Chainalysis as by far the world’s biggest crypto scam of 2020.
Provisional liquidator of MTI Riaan van Rooyen told Moneyweb the reason for the postponement was due to “certain parties intervening who believe that the company can be saved. I think it is unlikely”.
Van Rooyen said some traces of the bitcoin transferred to MTI by tens of thousands of investors had been located, but a full accounting of what happened to investor funds will take more time.
Van Rooyen added that there was still no sign of MTI CEO Johann Steynberg, who disappeared last year, apparently to Brazil.
It was previously thought that 23 000 bitcoin worth R17 billion had been transferred by members to MTI. The provisional liquidators are not trying to verify that.
“We can’t confirm the amount of bitcoin at this stage. We are busy with a section 417/418 inquiry (which is a secret inquiry), and seen in the context of the estate, we are reluctant to comment at this stage,” added Van Rooyen.
Brandon Topham, head of enforcement at the Financial Sector Conduct Authority (FSCA), said it was impossible that an unlawful scheme like MTI could be saved.
“It was a Ponzi scheme. This is a business that never traded. It was operating without a licence. How can you save an unlawful scheme?”
The FSCA advised the public to steer clear of MTI in August last year on the basis that it was operating without a proper licence and was making extravagant claims of returns of up to 10% a month, using a computerised trading system.
When the FSCA investigated, it found no evidence of any successful trading. In November 2020, the regulator conducted search and seizure raids on the offices of MTI and homes of some of its senior executives, and in November opened a criminal case against the company.
MTI was structured as a multi-level marketing scheme that rewarded members for signing up new investors, for which they could earn 10% commission on sums invested. The scheme was astonishingly successful at attracting new investors, even after warnings by the FSCA.
The FSCA has warned that those who profited unlawfully from the scheme would be asked to repay the money, and SA Revenue Services will also likely be keeping an eye out for its share of the take.