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MTI liquidators recover R1.1bn in bitcoin

With a ‘high likelihood’ of recovering more.
Image: Chris Ratcliffe, Bloomberg

Mirror Trading International (MTI) provisional liquidators have recovered 1 281 bitcoin, worth more than R1.1 billion at current prices, from the collapsed scheme.

Riaan van Rooyen, one of the joint provisional liquidators, told Moneyweb there’s a “high likelihood” of recovering more assets, following a Section 417/418 enquiry. The enquiry was held in terms of the Companies Act, which empowers liquidators to interrogate directors and officials in a quest to determine the reasons behind a company’s collapse, and to track down missing assets.

Van Rooyen could not reveal which MTI officials were questioned at the inquiry, as it is confidential in terms of the Companies Act. “What I can say is that we now have a better idea of what happened at MTI and where we might be able to look to potentially recover more assets. We are looking at every angle to recover assets, and we have had good cooperation from other crypto platforms in our investigations.”

Crypto exchanges started noticing unusual buying patterns late last year from people who had never owned bitcoin before, but were insistent on using these exchanges to purchase bitcoin and then ship them to addresses controlled by MTI.

MTI was placed in provisional liquidation in December last year after failing to pay out members’ requests for withdrawals. This was after CEO Johann Steynberg reportedly fled the country to Brazil, though the Financial Sector Conduct Authority (FSCA) believes he may be in Panama, which has no extradition treaty with SA. Others believe he is still in SA.

Read:
FBI jumps onto MTI investigation (Jan 4, 2021)
Liquidators swarm MTI (Dec 23, 2020)
MTI CEO goes AWOL, lawyers pull out (Dec 22, 2020)

Senior executives at MTI have maintained they were unaware that they were involved in a bitcoin scam that was offering up to 10% returns per month, though a dump of the MTI database by Anonymous ZA suggests some of the MTI “leaders” become multi-millionaires within a couple of years of joining the scheme.

It is reckoned that more than 23 000 bitcoin (worth more than R20 billion at current prices) were shipped to MTI by tens of thousands of members around the world.

Background

MTI claimed to be using a computer algorithm to generate these returns, but no evidence of the algorithm, or any successful trading, was found by the FSCA.

Van Rooyen says it will take more time to track down all the bitcoin shipped to MTI, given the difficulty of locating cryptocurrencies stored or hidden in different wallets.

In August last year the FSCA issued a warning on MTI and its exaggerated promises of 10% returns a month, and advised investors to request their money back.

Read: MTI was by far 2020’s biggest investment scam – Chainalysis

It seems thousands of people did not heed these warnings. MTI relied on a multi-level marketing system where members were paid commissions on new people introduced to the scheme. All seemed to be going well until late last year when the requests for withdrawals hit a slow, and members were asked to supply Know Your Customer (KYC) documents in order to access funds. Withdrawals came to a halt in December when Steynberg reportedly fled the country.

The 1 281 bitcoin recovered by liquidators came from a Belize-based broker called FXChoice that MTI had used for trading forex. A review of its trading performance found that it was losing money at a rapid rate, contrary to MTI’s claims of trading success. The FSCA likewise found no evidence of any successful trading by MTI.

Moneyweb previously reported that the application for the final liquidation of Mirror Trading International (MTI) has been postponed until May 31, apparently by groups that believe the company can still be saved and its debts restructured.

Neither Van Rooyen nor the FSCA believe there is much hope of that.

Other exchanges noticed unusually heavy bitcoin trading activity on the Luno crypto exchange this week, eliminating the usual arbitrage 2% to 4% gap that exists between local and overseas exchanges (South Africans generally pay 2% to 4% more for bitcoin on local versus overseas exchanges). It is believed these were the MTI bitcoin recovered from FXChoice being placed on the market for sale.

Marius Reitz, Africa general manager for Luno, says as much of the bitcoin shipped to MTI was purchased on Luno, it would make sense for it to be sold (on behalf of the liquidators) via the same exchange. He adds that the exchange became aware of clients shipping bitcoin to MTI, particularly after the FSCA warning, it started to block these transactions.

Van Rooyen has urged MTI members to lodge their claims at www.investrust.co.za and www.tygerbergtrustees.co.za.  Should MTI members have any queries regarding the lodging of claims, these queries may be directed at MTIclaims@investrust.co.za.

“We need everyone who was involved with MTI to lodge their claims” says van Rooyen.

Read: FSCA issues warning on crypto assets

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COMMENTS   10

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aah – some bits of the coin huh??

Hahahaaa.

You lodge your claim then they tell you to pay back the money!!

A bit concerning though that Luno acts on a FSCA “warning”??? I cant recall that the “warning” had any “Instructions” to exchanges and they now make it look as though “The state” (corrupt to the core by the way) is doing the determination of who trades when and where and how????

Very worrying indeed!!!!

Bottom line – Don’t keep your Bitcoin on an exchange!

This comment is such nonsense

If the BTC price keeps going up, they may actually make a profit out of the coins they recover…. what a bizarre scenario.

This MTI scheme’s “business plan” essentially came down to “handing away control of your electronic wallets”.

I always entrusted the key to our family safe to the gardener. He NEVER placed anything of value inside the safe…hence handing out the keys to the empty safe, must be a safe practice. MTI-supporters also think so…

Greed makes people do funny stuff… I mean come on

MTI was a very succesful business. They had a very cost-effective advertising campaign that grew their “funds under management” at an amazing rate. They had nothing to sell, but they sold it better than anybody. This is the essence of Marketing Management 101.

MTI had a great marketing plan to add value to its innovative business plan. The identification of a target market with a particular psychological makeup was at the core of their business plan. Then they simply had to motivate the target market to buy into the idea that a non-existent mysteriously innovative “AI trading bot” can generate 10% per month by trading currencies and crypto. They sold the idea to their target market, that something they do not have, can do something that cannot be done! The mystified target market bought it! Not even the prudential authorities could prevent this target market from enabling MTI to exploit their own misunderstanding of reality! How brilliant is this!?

Although most people still do not realize it, trading in bitcoin was not the business plan. The accumulation of bitcoin was the result of the business plan. Trading in human psychology formed the basis of the business plan. They found the right model, or formula, to use the promising combination of psychological factors namely ignorance, naivety, greed and arrogance, then they added a stiff dose of lies and promises, mixed it all together, and Voila! Bitcoin appeared on the other side of the production line.

MTI even had a deep and wide moat around their business plan. The law itself prevented competition! Their business was illegal, yes, but any attack from the competition would have been similarly illegal. MTI basically had a monopoly in selling something that does not exist to people who believe that money grows on trees.

I still fail to understand how BTI can be illegal, while Luthuli House is perfectly legal! They have exactly the same business models.

Kudos to the local industry players doing thier part to help keep the space clean. Luno, Valr, DCX, Altcointrader etc. MTI parasites have done significant damage to the image locally Im sure. Now when are we gonna start seeing prison sentences Mr Topham?

What is REALLY enjoying is that other top managers are no flat out LYING!
“We didn’t know it was a scam”? Yeah right.

I hope they all get arrested (eventually).

End of comments.

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