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- Justice Alma de Wet has ruled in favor of granting Mirror Trading International a final liquidation order (MTI)
- Those who are opposed to the liquidators’ intervening application have until July 30 to file a response
- MTI’s 50 percent shareholder argued against the company’s liquidation, claiming it would harm investors
Justice Alma de Wet, a South African judge, has ruled in favor of issuing a final liquidation order against Mirror Trading International (MTI), the country’s largest bitcoin scam in the previous year. Nonetheless, the judge postponed a decision on MTI liquidators’ request to declare the company an unlawful business until September 8, 2021. Interested parties who oppose the liquidators’ intervening application now have until July 30 to file their answering affidavits, according to a report. Liquidators, on the other hand, have until August 13 to file responding affidavits and until August 24 to file their heads of argument.
Meanwhile, the latest court ruling, which came almost six months after the provisional liquidation order was issued, is a victory for liquidators who had been up against MTI shareholders led by Clynton Marks. As previously reported, a 50% shareholder in MTI argued against the company’s liquidation, claiming that it would harm investors.
Almost $80 million lost in cryptocurrency scams
Bitcoin scheme that failed The Cape High Court placed Mirror Trading International (MTI) in final liquidation this week. This comes as liquidators announced that they had located approximately 8 000 additional bitcoins, in addition to the 1 281 bitcoins recovered from Belize-based broker FX Choice and sold for approximately R1.1 billion.
At current market prices, an additional 8 000 bitcoin is worth about R4 billion. Liquidators are optimistic that more of the estimated 29 000 bitcoin that flowed into MTI will be found. On September 8, the liquidators will go back to court to argue that MTI should be declared a Ponzi scheme. This would make it easier for the liquidators to track down funds they believe belong to the insolvent estate. Anyone who objects has until August 31 to file rebuttal affidavits.
Joint liquidator Riaan van Rooyen, speaking to Moneyweb after the final liquidation was handed down, urged MTI members to file claims with the liquidators, saying they need not worry about having to pay contributions to the insolvent estate.
Nearly 7,000 people have reported losses of nearly $80 million in cryptocurrency investment scams since October 2020. Since October 2020, there have been twelve times the number of reports in that period. The median median reported loss is $1,900. Scammers are cashing in on the buzz around cryptocurrency and luring people in scam opportunities. Sites often offer several investment tiers – the more you put in, the bigger the supposed return. Various investment scams websites use testimonials and cryptocurrency jargon to appear credible. Sites even use online dating to lure people into bogus investment scams. To learn more about cryptocurrency scams, visit the FTC’s website. If you spot a scam, report it to the FTC at Fraud.gov.
Trying to get as much money back as possible
They obviously want to get as much money back for their members as possible, especially the elderly and vulnerable. Members should be aware that they will not be required to contribute to the estate simply because they benefited from withdrawals. It simply means that their claims will be reduced by the number of withdrawals they have already received. If they put in R30 000 and only took out R10,000, their claim against MTI would be reduced from R30 000 to R20 000.
If Covid lockdowns do not prevent it, the liquidators intend to launch a national roadshow to contact as many MTI members as possible and assist them in filing claims.
Cryptocurrency investment scams
MTI’s multi-level marketing scheme benefited the company’s founders and early adopters, including 50 percent shareholder Clynton Marks, who opposed the company’s liquidation and argued that the company could be saved through other means.
According to a data dump by a group called Anonymous ZA, some MTI leaders earned more than R100 million from the scheme, and liquidators will be looking for what they believe is undue enrichment.
MTI’s leaders, including Marks, are thought to have profited in the hundreds of millions of rands from the scheme. MTI was named the world’s biggest bitcoin scam by Chainalysis in 2020. MTI boasted on its website of a computerized algorithm that generated daily returns of 0.5 percent, or about 180 percent per year – but the Financial Sector Conduct Authority (FSCA) found no evidence of such an algorithm, or of any successful trading at all, when it investigated. The broker told the FSCA that it received 1 846 bitcoin between January and June 2020, but that 566 bitcoin (roughly 30%) were lost.
MTI traded forex through FXChoice at first, but later purportedly switched to trading bitcoin through a new broker called Trade 300, which the FSCA determined was a fraudulent creation of MTI CEO Johann Steynberg and did not exist as a legitimate brokerage. By the time it was shut down in December, MTI was said to have 280 000 accounts. This was accomplished through a multi-level marketing system that rewarded members with 10% commissions on new referrals’ money invested.
Once accounts opened in the names of family pets and other bogus accounts are removed, liquidators estimate that the number of accounts will drop to between 150 000 and 180 000. Members could increase their earnings by expanding their down lines, even naming their dogs as investors, according to the multi-level marketing scheme.
Arguments from MTI Shareholders
Marks claimed, along with other opponents of the liquidation plan, that MTI was still solvent and that liquidating it would be premature. In addition, the MTI co-owner raised a series of technical arguments, claiming that the process that led to the provisional order’s issuance was improperly handled.
The liquidation hearing was finally held on June 15 after several delays, and the judgement was delivered 15 days later. It’s unclear whether the investing platform’s assets and proceeds from the sale of recovered MTI bitcoins will be enough to cover all of the company’s liabilities.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
