Update: A kind Moneyweb reader, who wants to remain anonymous, has offered to make a contribution to Nokuthula Makhanya to help her over her difficulties. Our thanks go out to this reader. There is indeed beauty in this world.
Of the many dozens of emails received by Moneyweb after the collapse of failed bitcoin investment scheme MTI, the story told by Nokuthula Makhanya is perhaps the most gut wrenching.
Makhanya is a domestic worker, and a single mother of two daughters, originally from Durban, but now working in Cape Town.
This is what she wrote: “I’m a MTI member. I joined on June 21 (2020) with $1 500 of my domestic money. Now I’m sending this email as I am left with nothing. Day in, day out I really don’t know that I can make it to the next day. I (would) like to know if there is any hope that I can get my money back from MTI.”
We had to break the harsh news to her that MTI is in provisional liquidation, and that she would have to submit a claim like tens of thousands of other members hoping to get something back, and that it would likely take a long time.
Liquidators swarm MTI (Dec 23)
MTI placed in provisional liquidation and damage could be huge (Dec 29)
MTI: Provisional liquidators appointed (Jan 13)
MTI profiteers could be asked to pay back the money (Jan 19)
In June last year she was introduced to MTI by a previous employer who referred her to Ella (surname withheld at her request), who helped her sign with MTI, a bitcoin investment scheme that promised investors returns of up to 10% a month using a computerised trading system.
The Financial Sector Conduct Authority (FSCA) has found no evidence of any successful trading at MTI, computerised or otherwise.
Makhanya had accumulated savings of about R25 000 after working for five years as a domestic, and had planned a trip to Nigeria in December 2020 to visit a friend she had met in Cape Town. The expected earnings from her MTI investment would help make it an especially joyous Christmas there.
Ella explained how the MTI system worked and encouraged her to open an account in her own name, and that she could accelerate her account growth by introducing others to the scheme, which she did – a friend and her daughter. She funded her own account to the tune of $300 and a further $200 for each of her daughter and the friend, making a total ‘investment’ of $700.
Makhanya later transferred another R10 000 to MTI. She was able to access the MTI dashboard on her phone, and could see her 0.1174 bitcoin reflected in her account.
To invest in MTI, you had to purchase bitcoin and then ship that off to a ‘wallet’ controlled by MTI. Makhanya transferred her funds to Ella who purchased bitcoin on her behalf and then shipped it off to MTI. The two are no longer communicating, pointing the finger of blame at each other. Ella says she tried to assist Makhanya on several occasions to withdraw funds, but on each occasion she refused – until it was too late.
By October MTI was swirling in controversy. The FSCA had issued a statement urging investors to ask for their money back because it was operating without the required financial services provider licence.
Makhanya knew nothing about this. She says her only source of information was the MTI ‘dashboard’ on her phone which reflected steady growth in her account. But she wanted to get access to her funds, knowing that she had a trip to Nigeria coming up, and would need some spending money.
Makhanya was told that her funds would be released in a few days. That never happened, it seems because she did not know the process involved in withdrawing money, despite the efforts of Ella and others to help her.
Then she found out that MTI was a scam, and that its CEO Johann Steynberg had skipped the country and that the company was provisionally liquidated.
“I had to cancel my trip to Nigeria, which I was looking forward to. I really don’t know what to do now. That was all the money I had.”
We reached out to Ella, who also has her own interesting story to tell. She ran a small restaurant in Cape Town which was shut down due to the Covid lockdown crisis from March 2020. Unable to pay her rent due to the lockdown, the landlord booted her from her premises, leaving her without a source of income.
Ella explains that a restaurant customer got her to invest $100 in MTI in January 2020. After the restaurant was shut down in June 2020, she happened to open her MTI account online and noticed her account had grown to $1 000.
Ella used her $1 000 to open MTI accounts in the name of her daughter and other family members. The profits she made from MTI allowed her to survive one of the most difficult periods of her life.
“There was a lot of beauty in MTI and it helped tens of thousands of people lift out of poverty,” says Ella. “People are accusing Johann of stealing the money and running away with it. There is no evidence to show this. The Johann I met was a caring, humble, generous and kind person, who only wanted the best for everyone. He was charitable, donating to many different entities, and he always paid above and beyond what was needed. I would be delighted to see him return, tell the truth and give everyone’s bitcoin back.”
Now that MTI is in provisional liquidation, Ella has launched a new business to support herself and her daughter.
What does she make of the FSCA’s finding that there was no evidence of successful trading?
“I am super shocked. On the other hand, I don’t see evidence of there being no trades. Whenever there was some negative news about MTI,. Cheri (Marks, marketing executive at MTI) would send out a voice message on Telegram saying there was nothing to worry about, and that there were forces out to shut down MTI.
It’s clear that Makhanya and Ella have entirely different views of their experiences with MTI. There are thousands more like them with stories just like theirs.
Listen: FSCA’s Brandon Topham and VALR’s Farzam Ehsani on the speed with which bitcoin and forex scams have ripped through SA and the MTI scandal’s impact on SA’s crypto market