MTI Bitcoin ‘trading’ scheme leads to wine, antidepressants and tears

Mirror Trading International (MTI), which was started in April 2019, collapsed after its CEO Johann Steynberg fled the country with over R5 billion worth of investors’ Bitcoin, and some ‘investors’ still believe that Steynberg will ‘do the right thing’ and pay out their money.

The Financial Sector Conduct Authority (FSCA), however, says there was ‘negligible trading from the so-called ‘copy trading service’, and 99% of funds were never invested’ as far as they could see.

The liquidators will do the forensic work required to determine how much money was ‘invested’ by investors. “There was also no ‘profit’ for investors because what was paid to them was money from other people,” says Brandon Topham, divisional executive of enforcement at the FSCA.

This means the scheme operated primarily as a Ponzi.

A trader speaks

Elme van Vuuren (55) from Rayton invested about R300 000 and withdrew about R100 000 in November. She still has more than 55 500 USD in her ‘account’, but she has been unable to withdraw it, she tells us with a shaky voice.

“What do you do when something like this happens? You get a box of red wine and take anti-depressants,” she says.

ALSO READ: Mirror Trading International bitcoin scam investors to pay back the money

After someone told her of this wonderful opportunity, Van Vuuren put a third of her pension money into the scheme, but she is just glad that she did not do the same with her husband’s pension.

She went on to recruit 101 people to join and feels particularly bad about hounding a friend for two months to invest the R50 000 she had inherited from her husband. The woman lives on a smallholding with no electricity. Another man invested R1,2 million of his pension money.

Didn’t bother checking for legitimacy

Van Vuuren says she did not check with the FSCA if the scheme was legitimate, because they traded in cryptocurrency which ‘does not fall under financial legislation’.

She feels sorry for Steynberg, because “everyone was on his case the whole time”.

“I think it was brilliant the way the website and the scheme were designed and it could have worked if he did not pay 10% commission when you got a new member to join. The commission was too high.”

ALSO READ: Investors owed over R1bn after two forex trading companies go bankrupt

According to Van Vuuren she knows how people abused the system. “I know of one man who would pay in a million rand and withdraw R100 000 in commission every week.”

Topham, however, says that Steynberg absconded as soon as he realised that the walls were closing in on him. “The scheme would probably have continued for some time, but the end result would be more people who would lose money. There was no legitimate operation, so it could never have worked.”

One source says transactions ranged from R200 to R50 million, with some of the high earners withdrawing up to R1 million per week for the 300 000 recruits he got. There are rumours that Steynberg could have been kidnapped, because his wife is still in the country.

Warnings not heeded

Other investors, such as Mari-lize Opperman and some investors who want to stay anonymous, invested up to R10 000 to ‘see if the system works’, but when they wanted to withdraw their money they were unable to. They all say they checked on Google to see if the scheme was legitimate, but nobody contacted the FSCA to check.

“We repeatedly tell people not to consider an investment if the company is not registered with us and even then there is risk. People can also check our website for warnings,” Topham says.

The FSCA has finalised its investigation into MTI and will share its report with the liquidators appointed by the Master of the High Court. The appointed liquidators are A.W. van Rooyen from Investrust Insolvency Practitioners, H. Bester from Tygerberg Trustees and J. Barnard and D. Basson from Tshwane Trust Co.

ALSO READ: Free State ‘forex trader’ found guilty of fraud, money laundering

The Consumer Protection Act

People who participated in MTI could also have transgressed the Consumer Protection Act.

According to article 43 of the act, about pyramid and related schemes, nobody is allowed to directly or indirectly promote, or knowingly join, enter or participate in a multiplication, pyramid, chain letter, or any other scheme declared by the minister or get any other person to do so.

A multiplication scheme exists when a person offers, promises or guarantees an effective annual interest rate of at least 20% above the repo rate. An arrangement, agreement practice or scheme is a pyramid scheme if participants in the scheme receive compensation derived primarily from their recruitment of other people as participants, rather than from the sale of any goods or services.

An arrangement, agreement, practice or scheme is a chain letter scheme if it has various levels of participation if existing participants canvass and recruit new participants.

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