Big surprise in Mirror Trading International liquidation case

The hearing for the final liquidation of defunct get-rich-quick scheme Mirror Trading International has been delayed until 15 June 2021.

This is after it had already been delayed once before in March by the Western Cape High Court, after it had allowed interested parties to appear and show any cause why a final liquidation order should not be granted.

MyBroadband also received confirmation from the judge’s secretary that the case has been allocated to a new judge — Acting Judge Alma de Wet.

In addition, the provisional liquidators appointed to the MTI case have filed a massive 1,400 page answering affidavit, MyBroadband has learned. Such a substantial response may indicate that there had been a significant legal challenge to the liquidation.

MTI was a South African network marketing scam that claimed to offer automated trading services — initially in forex and later in cryptocurrency derivatives. It accumulated billions of rand worth of bitcoin during 2019 and 2020.

Chainalysis named MTI the biggest cryptocurrency scam of 2020 in the most recent edition of its Crypto Crime Report.

Between 2019 and 2020 MTI went through a few iterations, but its surge in growth came after it adopted a multilevel marketing referral system.

Prior to its network marketing rewards system, MTI appeared to operate more like a conventional “copy trading” service.

Part of MTI’s pitch was that CEO Johann Steynberg, together with his team of technical gurus, had developed a magical trading “bot” powered by artificial intelligence that could generate returns of 0.5% to 1.5% per day in members’ bitcoin.

Many people warned that the promised returns were too good to be true and that MTI was a scam.

Several warnings were issued from official bodies, including the Texas State Securities Board, Canada’s Autorité des Marchés Financiers, and South Africa’s Financial Sector Conduct Authority (FSCA).

MTI collapsed in late 2020, as warned, with the scheme’s leadership blaming Johann Steynberg who allegedly disappeared in Brazil on 15 December.

A group of members acted quickly and instituted liquidation proceedings against MTI within days of the announcement that Steynberg had gone missing.

The Cape Town High Court granted a provisional liquidation on 29 December 2020 and provisional liquidators were appointed on 12 January 2021.

The final hearing for the liquidation was set to happen in the Western Cape High Court today, after it was delayed on 1 March.

Johann Steynberg
Mirror Trading International CEO, Johann Steynberg

It is understood that there were initially three groups that opposed the liquidation of MTI, but that one major opponent to the liquidation remains — 50% shareholder and the former Head of Referral Programme and Members at MTI, Clynton Marks.

Marks is also a respondent in a separate matter involving another alleged Bitcoin investment scam called BTC Global, which collapsed in 2018.

Eighteen plaintiffs lodged a civil claim and demanded compensation relating to BTC Global totalling R2.5 million plus 7% interest per annum. Marks is one of three respondents.

Sources with knowledge of the matter have told MyBroadband that the liquidators in the MTI case have filed an answering affidavit of over 1,400 pages in response to Marks’ opposition to the liquidation.

None of the papers are publicly available yet.

MyBroadband contacted Marks for comment, but he did not respond by the time of publication.

The liquidators currently have custody of the cash equivalent of over 1,200 bitcoin, which was worth over R1 billion at the time they reclaimed it from an overseas brokerage called FXChoice.

FXChoice was the broker originally used by Mirror Trading International. It froze the 1,200 bitcoin in June 2020 after it detected suspicious usage patterns on MTI’s account.

The funds were transferred to the liquidators in South Africa at the authorisation of the Financial Services Conduct Authority (FSCA), FXChoice stated.

While the 1,200 bitcoin represents a substantial recovery, it is a small percentage of the total deposits that flowed through MTI.

According to Chainalysis, MTI received $588 million (R8.8 billion) worth of bitcoin across more than 470,000 transactions, primarily from exchanges, but also from self-hosted Bitcoin wallets.

Data from the MTILeaks, released in September 2020 by a group calling themselves Anonymous ZA, showed that as at 14 September 2020 nearly 23,000 bitcoin had been deposited into the scheme.

At the time, 23,000 bitcoin was worth roughly R4 billion. At today’s exchange rates it amounts to over R12 billion.

Now read: MTI bigwigs hit with R2.5 million claim over previous crypto scam

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Big surprise in Mirror Trading International liquidation case