The famous South African cryptocurrency exchange, Mirror Trading International (MTI) was a glaring example of one of the crypto-related scams reported in December 2020. It was reported to have scammed its investors out of about R9.45 billion. Reports also revealed that the Chief Executive Officer, Cornelius Johannes Steynberg, absconded from South Africa and is currently nowhere to be found with no trace of recent communication.
Earlier in 2020 before the exit scam was revealed, South Africa’s Financial Sector Conduct Authority (FSCA) had released statements that MTI was conducting an illegal business and had advised members of the public to steer clear of it. At the beginning of its life span, the exchange had claimed that user funds were managed by professional traders who were appointed by the company to trade derivative instruments based on forex pairs. Later on, the CEO announced that MTI perceived losses of up to 80% and then asked users to move their funds to a pooled bitcoin wallet promising a return of 10% on their investment per month. More than 260,000 investors from over 170 countries bought into the idea. There has been no payment of such returns and investors have brought forward applications to the Cape High Court for liquidation of the company. It was also reported that the senior excutives were not aware of the scam. The CEO, Johannes was in complete control of the firm’s operations.
Now, after less than a month that a provisional order of liquidation was granted against MTI, the liquidators are still seeking expanded powers to investigate the company further and recover investor funds. As the liquidators are currently trying to trace all the company’s assets, these expanded powers would enable the team operate across multiple jurisdictions to assess the full scope of MTI’s operation and be able to report on the likelihood of successfully returning the invested funds to the victims.
After due investigation was conducted by the Financial Sector Conduct Authority (FSCA), it was revealed that there was no evidence of successful trading by MTI and it is believed that the firm is holding about 23,000 BTC worth over $880 million at the current Bitcoin price.
It appears from reports that the courts may grant a final order for the liquidation process by March 2020 if the proceedings remain unopposed. Once this order is granted, the MTI’s creditors will meet to vote on a final liquidator.
This is just one of the many crypto-related scams out there. All members of the public who wish to invest in the crypto space are advised to do their due diligence before venturing into any crypto investment.