FBI jumps onto MTI investigation

MTI’s collapse under suspicion of fraud is attracting heavyweight international law enforcement attention.
Image: Richard Sheinwald, Bloomberg News.

As bitcoin hit R500 000 over the weekend, the scale of the Mirror Trading International (MTI) collapse is growing by the day.

This weekend it was confirmed that the US Federal Bureau of Investigation (FBI) has thrown its weight behind the international investigation into MTI, the bitcoin investment scheme which promised returns as high as 10% a month. The scheme managed to attract a reported 23 000 bitcoin from around the world, most of this coming in the last seven months. This is worth around R11 billion at current bitcoin prices.

According to legal advisor Hendrik van Staden, speaking on a recent webinar with US lawyers on recent developments on the case, the US Federal Bureau of Investigation (FBI) has started monitoring the scheme, which stopped paying out members’ requests for withdrawals in early December, resulting in the Cape High Court placing MTI under provisional liquidation just before Christmas.

Read:
MTI CEO goes AWOL, lawyers pull out (Dec 22)
MTI does not know if its bitcoin is safe (Dec 23)
Liquidators swarm MTI (Dec 23)

This was confirmed by members of the Recovery Action Group (RAG), which was formed in the last few weeks to represent the interests of MTI investors.

“The FBI is obliged to get involved wherever suspected fraud using US dollars is involved,” says Advocate Vaughn Victor, a cyber security and crypto expert involved in investigating financial fraud. “Because of the international nature of this investigation, there will be multiple law enforcement agencies from around the world getting involved.”

Though MTI claimed to have 280 000 members, research by Victor says the actual number was closer to 60 000, with many of these members creating “downline” accounts to beef up the numbers so as to benefit from the 10% commissions paid for introducing new members.

In financial terms, the largest volume of investments outside of SA are reckoned to have come from the UK and US.

Stuart Fraenkel of US law firm Nelson & Fraenkel says evidence is emerging that the bulk of US investors in MTI are based in California.

In recent months, regulators in Texas and Canada sounded the alarm over MTI’s business practices. The company is accused of making misleading claims about its returns, while the Quebec Financial Market Authority listed MTI as a company that solicits investors illegally. SA’s Financial Sector Conduct Authority (FSCA) also issued a warning about MTI’s business practices.

Fraenkel says information obtained from the Texas State Securities Board, working with the FBI, shows some of the “bad actors” within MTI are based in California and two of them are in bankruptcy. “Authorities here [in the US] will be digging to see where did the bitcoin go, and there will be a claw-back provision.”

The investigation will require cooperation between legal authorities and law enforcement agencies in multiple jurisdictions to help in tracking down the bitcoin shipped by investors to MTI.

The picture is complicated by different national laws which could hamper the task of clawing back missing assets in different parts of the world.

The investigators will have to track down bitcoin from multiple wallets that may be well hidden, and return these assets to the control of MTI. They will then have to be aggregated to see what is left of the estimated 23 000 bitcoin sent by investors to MTI.

The founder and CEO of MTI, Johann Steynberg, reportedly fled to Brazil in early December and went out of communication with management about a week later. This was after the FSCA issued a warning to the public to avoid MTI and its claims of high investment returns. In October, the authority launched a search and seizure raid on MTI’s offices and the homes of executives and in December issued a report blowing holes in MTI’s claims of being a successful bitcoin trading company. The scheme started to unravel shortly afterwards.

Read:
MTI plans countersuit after FSCA raid on offices and homes of execs (28 Oct 2020)
FSCA opens criminal case against MTI, says investigation ‘nearly complete’ (17 Dec 2020)

Liquidators are likely to be appointed within the next couple of days and can then start the legal process to freeze MTI’s assets. They will then seek the cooperation of authorities around the world to block the transfer of bitcoin belonging to investors. The MTI server is reportedly based in India, which has severe penalties for those engaged in financial crimes.

Victor says bitcoin “wallets” known to be under the control of MTI and those associated with it are being monitored and tracked to prevent assets being transferred to third parties. Members are being asked to nominate their preferred liquidators by signing on here or here.

Once the liquidators are appointed, they will ask the court for extended powers to assist in the tracking and recovery of assets internationally. They are also likely to convene a Section 417/418 inquiry under the Companies Act to interrogate MTI executives and leaders who profited from the scheme to assist in tracking down the assets.

It appears MTI had only one director, Steynberg, who was responsible for the day-to-day running of the company and the issue of payments. This in itself appears to be a violation of the Companies Act, given the apparent absence of a board and the various governance committees required for a company of this size.

Read:
FSCA investigating Mirror Trading International (19 Aug 2020)
Joining MTI may end in tears (20 Aug 2020)
Get-rich-quick scheme pulls a crowd, despite regulators calling time-out (28 Aug 2020)
Anonymous data dump ‘spills the beans’ on Mirror Trading International (21 Sep 2020)

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Hopefully the names of those scumbag saffers will be given to Department of Homeland Security, ICE can come knocking on your door. “Should” be easy visa revoke. Flag the rest of MTI crew with DHS so they dont get ideas of coming here again. TSEK

I am sure most other “saffers” would agree with your sentiment. From your comments it seems you are US based.

But from a legal perspective would it not be better to have them there and not in some place like liberland (mentioned in previous blogs) where they can enjoy without a worry their takings and there is a possibility that the authorities may get back some of the money.

Are you talking about Joel Santiago? lol Santiagos secret is that he’s a scammer

Interestingly, you Republican or Democrat? 😉

After this week’s events, I believe Mexico insists they WANT TO pay for the border wall.
Apparently Canada also now wants a wall.

An empire in turmoil. I need to review my prediction when China will become the world’s largest economy.

This is going to take a loooooooong time to resolve. A very long time.

Probably not because it’s involving International investors, its not just locally as SA other scams

Every thriller movie has a good ending in the USA,
the bad guys go to jail.

Lets see how they react with the FBI on their trail now.
The FBI has access to very high tech also.

I suspect some people are going to run to Dubai or back to SA.

Reminds me of the André Stander-gang in the 1980’s. Been running circles around the local authorities for a few years.

Within the first few weeks arriving in the USA….he met his match.

…but what a brazen character he was!

https://en.wikipedia.org/wiki/Andr%C3%A9_Stander

If it was only South African law enforcement that was looking for Johann, it may have been a different story. But with the three letter law enforcement agencies involved, it is going to get a lot tougher for Johann and his cronies.

Agree. As South African law enforcement is typically a “nul op ‘n kontrak”, and now with FBI involved….at least for the first time a (proper) law enforcement agency gets involved.

Nice challenge ahead for their cyber crime specialists.

Take ANYTHING coming from RAG with a bucket of salt
They are the same ones that are certain no ill-gotten gains that “investors” withdrew can be reclaimed for liquidation

Yip they in for a very big surprise

Why didn’t the FBI jump onto the Gupta / Zuma case??

Good question.

Perhaps Ace is a CIA agent working under cover to expose the whole lot!

I’m allowed to dream!

“Dreams are good friends”

…*lol* if Ace M is a CIA agent, he must’ve gone rogue! 😉

Maybe Thuli Madeonsela or Derek Hanekom are CIA agents.
But I’m now in dreamland as well…..

I suspect the FBI would upset the relationship between Dubai and the US.

I mean would you not also get upset if you had to return perhaps Millions or Billions of Dollars (Belonging to the SA Taxpayer) back to SA?

If all these transactions rely on Blockchain technology which is supposedly ultra traceable due to its software design then why is it so difficult to find where the bitcoins went?
There have been other bitcoin thefts at major deposit houses and these Bitcoin were also not found.
What am I not not understanding?

Shhhh….crypto was invented for crime purposes, and for the tech-savvy to steal from the rest on the planet.

The fact that you can buy/sell in crypto & transfer across borders…..are just convenient sideshows.

Crypto protagonists all say its traceable, but really it’s not. Difficulties in finding the missing MTI crypto, will be the proof in the pudding.

I’d be reluctant to call them MTI “investors”… Just saying.

When will the FSCA or even FBI investigate MyWealthMethod, it’s literally one of the most obvious ponzi schemes and a carbon copy of MTI.

If no one filed a complaint or a criminal case, never

What about the whole MTI team ? They obviously were in on the scam. Lock them up !

…they will go to “virtual” prison, and the “virtual” cell keys thrown away.

They will serve virtually. Like crypto. It’s virtual…it only exists on a server/web, that can be shut down. No recourse.

The real money is in FIAT accounts of criminals hidden away in tax havens.

By now Johann is JoAnne with a new face and recuperating from her surgery on her new yacht in the Caribbean. The crypto is long since laundered into real assets

Heartwarming that people are so gullible… “opinion is really the lowest form of human knowledge… it requires no accountability and no knowledge”…

To MW,

I really appreciate the no nonsense fact based reporting on this event, however just a suggestion.

I would really like to know what was going on in these “investors” minds at the point they decided to go for this which in hind sight to us seems to be obviously a con. maybe some interviews with the “victims” and maybe even professional opinion.

In the blogs reasons are given by others (not the victims) such as stupidity (a fool and his money are easily parted….), greed (10% a month), FOMO and there is even the evil theory that these people knew what they were doing but that they thought they could outcon the “conners” and get out early and let other “fools” take the fall, some kind of fatal attraction or fallacy that they are smarter than others.

It’s not like that at all. There are a lot of people who don’t know eny thing about trading that got involved in MTI and the people that got them involved also dit not have much knowledge about trading I put in all I had into MTI because my hole life is one big struggle to make life better for my family and my self its bad to lose everything because I trusted Johan when him and his team promise There investors that there bitcoin was save and we do not have to worry. So please don’t tell people what stupid move it was if you do not know how much people struggle

Thank you for the reply, just a correction, I never stated stupidity, this was one of the reasons stated by other bloggers previously.

The reasons you give is a lack of knowledge and due to this you relied on your trust in “Johan” as I assume that you know him (affinity scheme) and also you were promised exactly what you need to solve your current circumstances.

This is three more reasons these things happen and why I asked MW to investigate this side of the story as well.

it is astonishing, we have one after the other of these schemes that are clearly when you look at them and understand the non sense nothing less than fraudulent. In many instances they are sold by untrained salesmen surely one must understand that they are nothing more than a sham. The regulator seems to be fast asleep why wait act sooner take a hard line on white collar crime. How many people have lost their livelihood it is just unbelievable.

We are not cladding ourselves in glory.

I have been in the financial business for 48 years. There are no such thing as “money guaranteed” and the only thing that is guaranteed in everybody’s life is that we are all going to die at one stage. No money can be guaranteed. Get rich quick schemes never succeed. Ever! Stick to the basics and the well known financial institutions.

I “invested” in MTI. Did it seem like a scam? Potentially. Did it seem too good to be true? Yes. Did I only “invest” as much as I was willing to lose? Yes. I feel for those who put in more than they could afford to lose.

…if you press the “withdraw” instruction on MTI’s demo screen, what happens?

Please DON’T hand over control to your BTC-wallet to anyone ever. No one is going to give away his/her bank card PIN, or online banking login details….then why handing over a Bitcoin wallet???

It’s like standing next to ATM and hand cash to a 3rd party, telling you that he can double your money & will return with it tomorrow…

Hopefully you’re still in your 20’s, and still learning what life is all about 🙂 Don’t trust people! You’ll do better next time.

Not sure where you get the idea that control of, or log-in details of individuals bitcoin wallets were simply handed over to MTI?
If you read carefully what I wrote you’ll see that I took a calculated risk with an amount I was willing to lose.
You should assume less, maybe you’ll do better 😉

I don’t think Steynberg is running from official institutions alone. There are potentially more crooked and dangerous individuals who’s bitcoin he was in position of than he would care to know.

Yes, I don’t believe he’ll leave his daughter and have no contact, Must probably is that MTI management don’t want him to show up and snitch on them

End of comments.

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