SIMON BROWN: I’m chatting now with Brandon Topham. – he’s the divisional executive of enforcement at the FCSA. Brandon, morning. I appreciate your early morning time. Reports over the weekend [were that] Mirror Trader International has been put into provisional liquidation; allegedly everything has disappeared. We can report that those who had withdrawn money from Mirror Trader International are going to have to pay it back. [Can you] confirm the legitimacy of those reports?
BRANDON TOPHAM: Morning. That is common law in South Africa. So, if you’ve been a participant in an unlawful scheme, the liquidators are in a position to claim that money back; that doesn’t have a time limit either. And if they don’t do it on that basis, they’ll do it on a basis in certain circumstances of certain of that being preferred at the expense of other creditors.
SIMON BROWN: This is, if I understand correctly, even if you put R100 in and took your R100 out – in other words, you haven’t made a profit – even for that R100 you took out, you’re going to get a claim for that money.
BRANDON TOPHAM: That’s correct in theory. Practically, it obviously costs the liquidators a lot of money and time to go after all the money.
So the best bet is for persons to approach the liquidators and try and do an arrangement with them to pay back only the interest, or the unlawful return.
There are cases where liquidators can settle with the creditors.
SIMON BROWN: As you said upfront, the issue here is quite simple. It’s an alleged crime at this point in the process, but if you’ve made money from an alleged crime – you can’t do that, that is just a breach of any sort of ethical and legal process – that needs to be returned and therefore distributed accordingly?
BRANDON TOPHAM: Correct. I said right from the start to people who would listen that we need to make a good example in South Africa of a Ponzi because it doesn’t happen in many cases. But because this is such a large one, there are going to be people and time and resources applied to it – and here we can make an example so that the public can actually learn their lesson in this,
…because there are a lot of professional Ponzi investors in South Africa. They get in early and they bring in other people, and they try to get out. And nobody comes after them.
But I think in this case we can see something different.
SIMON BROWN: Ooh, I hadn’t thought of that. I suppose so, because it’s usually the case that the whole Ponzi scheme is that if you’re in early you can actually do alright. You’re suggesting that there are actually people who sort of hunt these out with the awareness that [they should] get in quick, get out quick, and essentially take the money and run?
BRANDON TOPHAM: Correct. I’ve heard people tell me that on radio station shows as well when we talk about Ponzis in South Africa. Also, people say that they don’t know that it’s wrong, and so on. That’s the bottom line.
We tell people all the time if it’s not FSB [Financial Services Board] approved, don’t invest in it.
SIMON BROWN: That’s always the easy process. You go to the FSCA [Financial Services Conduct Authority] website, check if they’re there. That was my big claim with Mirror Trading back in May of last year – where’s their licence? They said they didn’t need one. I [said], “No, no, you’re taking money”.
The last point. One of the issues, we are going to see a lot around Bitcoin in particular [is that] it does lend itself to this sort of illegal activity, simply because the money can disappear. There’s not that traditional paper trail you get from banking. And we’re going to see, probably, a lot more of these around the crypto space.
BRANDON TOPHAM: Well, look, if you go back through hundreds of years, we’ll see that unlawful behaviour has always been performed around new technologies and so on. People don’t understand it much, so it’s much easier to pull a fast one on people.
I’m not a lover of any of the crypto assets. I personally don’t believe in them at all. But, in fairness, the crypto assets are used as much as any fiat currencies are. But at the moment law enforcement and the like, and people like us, are still learning how to trace and follow up on crypto assets. So it’s going to be used a lot more for the next couple of months, maybe years. And maybe the traditional set.
SIMON BROWN: And that’s the warning to listeners out there. There’s a lot that red flags a scam. If it’s crypto, you want to perhaps be digging a little bit more. We’ll leave that there. Brandon Topham, divisional executive of enforcement, FCSA, I appreciate your early morning.