MTI Bitcoin scam kingpin now being hunted by the FBI

America’s Federal Bureau of Investigation (FBI) has joined the hunt for Mirror Trading International (MTI) Bitcoin scam kingpin, Johann Steynberg, who allegedly defrauded investors of billions of Rand over the past few years.

Steynberg disappeared in December, when he reportedly left for Brazil.

Steynberg started MTI in April 2019 as an automated Bitcoin trading platform. Investors had to deposit a prescribed minimum amount of Bitcoin in MTI’s wallet and MTI said that it would grow these ‘investments’ by between 0.5% and 1.5% per day, using a ‘Trading Bot’ that uses software based on artificial intelligence.

ALSO READ: MTI CEO disappears with over R5 billion in investors’ bitcoin

The cracks started to show

Investors were promised even bigger returns if they referred other ‘investors’ to MTI.

The scheme started to show cracks when the FSCA started investigating them, and the group Anonymous ZA hacked MTI and disclosed data that showed MTI was a multilevel marketing scheme and would not be able to keep its promises of fantastic returns to its investors.

MTI simply did not have enough Bitcoin to repay its initial Bitcoin investors as well as the promised growth. As a result, the company was provisionally liquidated at the end of 2020 and finally liquidated on 30 June 2021.

ALSO READ: Bitcoin scammers Mirror Trading International face R100 million fine

FSCA investigation

The Financial Services Conduct Authority (FSCA) is also intending to have MTI fined R100 million for running a financial service without being registered. The FSCA found that MTI was a scam or dubious venture, and that no trading ever took place.

According to a statement issued by the five liquidators appointed to wind up the company, the FBI is joining forces with them in the interest of several US and local investors, to ensure that the masterminds behind the scheme are brought to book.

The whereabouts of Steynberg, the chief architect of the scheme, is uncertain. The liquidators say although there is a paper trail, such as an airplane ticket to Brazil, they could find no video or photo confirmation that proves he left the country.

ALSO READ: MTI bitcoin scam’s Steynberg provisionally sequestrated

Associates question FSCA and liquidation

After the court granted the final liquidation order, two of Steynberg’s close associates, Clynton and Cheri Marks, filed arguments to question the FSCA’s procedure and the implications of the liquidation order.

Clynton Marks now argues that the application to declare MTI an illegal scheme, as well as the liquidation order, is merely aimed at getting investors’ money into the hands of the state. Marks also argues that the Master of the Court warns against it.

However, the joint liquidators say these assumptions are entirely wrong.

“It is not correct that declaring the business model of MTI a fraudulent or illegal scheme would allow the liquidators to seize all the money that flowed into the scheme.

“In terms of the provisions of the Insolvency Act, the liquidators will only be entitled to recover payments made to investors which were not legally owed to them. If an investment scheme is illegal, profits and referral commissions were not legally owed to the recipients and can be recovered by the liquidators for the benefit of who actually lost their capital invested in the unlawful scheme.”

The liquidators also emphasise that it is also not correct to say that the any money recovered could be forfeited to the state, as recovered funds will be used to pay the real victims, who lost their capital, a pro-rata portion of their claims. They are also not aware of any warning by the Master of the High Court.

ALSO READ: Billions worth of bitcoin found as MTI is placed in final liquidation

Illegal business model

Their reasons for obtaining an order to declare the business model of MTI illegal are to obtain clarity and legal certainty on this critical issue and to recover ill-gotten gains or profits and unlawful commissions or bonuses from the so-called winners in the scheme to benefit the actual victims.

According to the liquidators, it is important to note that many MTI investors received tens of millions of rand worth of Bitcoin through fictitious profits, commissions, and bonuses.

“As all the evidence clearly shows that there was no profitable trading in MTI, it is a foregone conclusion that these profits and commissions or bonuses were simply paid with the funds derived from new or long-term investors.”

They say it is important to note that MTI only accepted deposits in Bitcoin and not the equivalent value in cash. Investors had to buy Bitcoin using a crypto exchange platform and then invest it in MTI by transferring it to a digital wallet MTI controlled.

The application to declare MTI an illegal scheme will be heard on 8 September 2021.

According to the liquidators, Clynton Marks openly marketed fraudulent schemes, such as the Russian MMM scheme, on social media by promising returns of 30% per month, years before the collapse of MTI.