MTI kingpin Johann Steynberg reportedly died in Brazil

MTI kingpin Johann Steynberg has reportedly died in Brazil after a massive heart attack. He was under house arrest awaiting his extradition hearing after he was caught using forged documents when state police asked for his identification in December 2021.

Brazilian news publication, O Popular, reported yesterday that Steynberg’s lawyer, Thales Jayme, confirmed that Steynberg, 41, died on Monday on the farm where he lived in Pirenópolis since November last year when he was released under house arrest.

According to Jayme, Steynberg had mental health problems that got worse since 15 April when Jayme took him to a doctor who confirmed he suffered from serious anxiety. Jayme told O Popular that Steynberg’s wife, who rented the farm, visited him on weekends and she also noticed that his behaviour had changed.

He also left behind a wife and child in South Africa. Steynberg was buried on Wednesday in Jardim das Palmeiras, in Goiânia state, according to O Popular.

According to MyBroadband, Steynberg was fined R595 000 for using forged documents and his sentence of three years and six months was commuted to an additional fine. However, he was remanded pending his extradition hearing for his role in the Mirror Trading International (MTI) pyramid scheme.

He left South Africa in December 2020, ostensibly to visit a plantation he had bought in Panama, but then disappeared.

ALSO READ: Victims of MTI Bitcoin scam anxiously waiting for Steynberg’s extradition

MTI promised returns that were too good to be true

Steynberg started MTI in April 2019 as an automated Bitcoin trading platform and investors deposited a prescribed minimum amount of Bitcoin in MTI’s wallet which MTI said it would grow by between 0.5% and 1.5% per day using a ‘Trading Bot’.

Investors could earn even bigger returns if they referred other investors and thousands of people invested in MTI, but the scheme started to collapse when the Financial Sector Conduct Authority (FSCA) started investigating the scheme and the group Anonymous ZA hacked MTI.

Anonymous disclosed data that showed MTI was a multifaceted marketing scheme and would not be able to keep its promises of fantastic returns to its investors.

MTI just did not have enough Bitcoin to repay its initial Bitcoin investments as well as the promised growth. The company was provisionally liquidated at the end of 2020 and finally liquidated on 30 June 2021.

Steynberg then allegedly moved the funds to a new broker, Trade 300, but the FSCA later found that Trade 300 was a fictitious platform Steynberg created. The company was provisionally liquidated at the end of 2020 and finally liquidated on 30 June 2021.

Meanwhile, Steynberg fled the country and was arrested by police in Brazil in December 2021 for using fake documents. He was apparently the only person who had access to the crypto currency codes. The National Prosecuting Authority had applied for his extradition to South Africa.

ALSO READ: This is what the MTI liquidators have found so far

MTI declared a pyramid scheme

Judge Alma de Wet found in April last year that MTI was indeed a pyramid scheme in terms of the Consumer Protection Act and that Steynberg did not use an artificial intelligence bot to achieve the alleged incredible trading results.

She also found that he did not transfer bitcoin deposited by investors held in a pooled account at FX Choice to Trade 300. It follows that the representations made by Steynberg and the management of MTI in this regard were false and that in her view, these false representation on a balance of probabilities showed that the business of MTI was fraudulent, she said in the judgment.

Referring to the findings of the FSCA, De Wet said MTI’s business, on a balance of probabilities, was a common law Ponzi-type scheme conducted in breach of the Consumer Protection Act.

What does this mean for investors?

According to Moneyweb, a spokesperson for the liquidators said the declaration of MTI as a pyramid scheme should speed up the recovery of funds from winners who withdrew more than they invested, as each individual recovery claim against a winner will not have to be proven in court.

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

Steynberg also ordered to pay back money in the US

This judgment came just two days after a federal judge in Texas ordered Steynberg to pay $3.4 billion (about R65 billion) for what the US commodities regulator said was its largest-ever fraud case involving bitcoin, Reuters reports.

Steynberg was also ordered to pay $1.7 billion in restitution to victims of the fraud scheme and another $1.7 billion as a civil penalty, a record for any Commodity Futures Trading Commission case, the regulator said in a statement on Thursday.

The CFTC charged Steynberg in July, saying Mirror Trading solicited bitcoin online from thousands of people to purportedly operate a commodity pool. The firm claimed to trade off-exchange, retail foreign currency with participants who were not eligible to trade, the regulator said.

From May 2018 to March 2021, Steynberg accepted and misappropriated at least 29 421 bitcoin, valued at more than $1.7 billion by the end of the period from about 23 000 participants from the US, including more than 1 300 in Texas, the CFTC said.

The liquidators referred a request for confirmation of Steynberg’s death to the department of international relations and cooperation which did not respond immediately. Their response will be added when it is received.