Mirror Trading International’s liquidators have offered to demonstrate good faith to victims of the alleged pyramid scheme by paying a portion of their claims.
In exchange, those who want to take the deal must withdraw their opposition to the liquidators’ application to have the court declare Mirror Trading International (MTI) an unlawful scheme.
According to the court order, which MyBroadband has seen, the deal is conditional on the High Court finding that the business of MTI was conducted illegally.
Victims who have not opposed the application to declare MTI a pyramid scheme can also take up the deal.
The liquidators stated that this deal is available to all “true losers” of MTI — those who did not withdraw more than the rand value they put into the scheme.
This is an important detail, as MTI took deposits in bitcoin. However, the bitcoin value must be converted to rand using Luno’s exchange rate at the time of the deposit and withdrawal for the purposes of the deal.
Mirror Trading International was a network marketing scam that claimed to offer automated bitcoin-based trading services — initially in forex and later in cryptocurrency derivatives.
MTI made headlines in September 2020 after MyBroadband exposed the inner workings of the scheme, thanks to a data leak from a group calling itself Anonymous ZA.
The scheme collapsed at the end of 2020 after CEO and founder Johann Steynberg skipped the country, disappearing in Brazil.
Steynberg was arrested in Brazil a year after he disappeared, on 29 December 2021, after allegedly presenting fake identification to law enforcement officers.
Chainalysis named MTI the biggest cryptocurrency scam of 2020.
Court documents gave the last estimate of the funds that flowed through MTI as 29,421.03379 bitcoin — over R20 billion at current exchange rates.
However, a source with knowledge of the case told MyBroadband that the latest analysis shows that more than 46,000 bitcoin (R31.3 billion) flowed through the scheme.
With the help of the Financial Sector Conduct Authority, the liquidators managed to reclaim 1,281 bitcoin in early 2021 from Belize-based brokerage FXChoice.
They immediately sold the cryptocurrency and ended up getting a favourable rate, liquidating it for around R1.1 billion.
The same amount of bitcoin would fetch around R870 million at today’s exchange rates.
The deal — 20c in the rand
While the liquidators have yet to accept any victims’ claims at a creditors’ meeting, MyBroadband understands that there have been R355 million in claims previously submitted to the Master of the Court.
MyBroadband had heard from several people in court on Wednesday, when this deal was hatched, that the liquidators will pay the victims an initial dividend of 20c in the rand.
In a statement issued on Thursday, the liquidators said they made the deal with a group of net-losers and specifically a controversial group called GetaQuid, represented by JC Kriel.
GetaQuid says it represents 15,000 investors, according to the liquidators.
“The settlement with the groups of creditors is welcomed by the liquidators and seen as very constructive steps towards finalising one main area of the administration of the estate, namely the processing of claims of true losers, who are entitled to a dividend as soon as possible,” the liquidators stated.
MyBroadband spoke to GetaQuid’s legal representative Ruann Kruger and asked why the deal wasn’t for 100% of the claims.
Kruger explained that the liquidators would first verify claims against the MTI database in their possession.
Verified claims go to a provisional liquidation distribution account, after which they will receive an interim dividend, likely somewhere between 10% and 30% of the claimed amount.
“They don’t want to pay out too much to the first claims, and then there’s nothing left for claims that come in later,” Kruger said.
He said that the liquidators have committed to expediting claims as much as possible and will meet every few months to approve further payments.
MTI victims should be aware that GetaQuid charges a fee for its services and that it is not necessary to go through them to use this deal.
Kruger said it was not unusual for class action groups to ask members to contribute to help cover its expenses.
The liquidators said they would shortly upload a written consent which investors are encouraged to download, sign and submit together with their claim.
MTI pyramid scheme hearing delayed — again
The application to have MTI declared an unlawful scheme was postponed to 29 April 2022.
According to the liquidators, this was the fault of MTI 50% shareholder Clynton Marks.
They stated that Marks had inundated the court by filing voluminous papers during the week — and had done the same on several previous occasions.
It is interesting that the liquidators single out Marks, as they had responded to at least two thick stacks of papers in the past week — an affidavit from Henry Honiball, and a supplementary affidavit from Marks.
Both filings were well over 200 pages. Honiball also filed a supplementary affidavit of 87 pages.
“Mr Clynton Marks still opposes the application of the liquidators to declare MTI an unlawful scheme and alleges that he does so as the protector of creditors of the scheme,” the liquidators stated.
“This is, of course, false: he is one of the biggest winners in the scheme, and his agenda is simply to try and avoid a day of reckoning in terms of paying back and having to testify further.”
The liquidators said their Cape Town legal team worked non-stop to respond to his late and irregular filed papers. Some of this work lasted until the evening before court on Wednesday.
“The liquidators have no doubt that the agenda behind the late filings was simply to place the liquidators and the court in an impossible position to deal with all the papers in the short time available.”
Marks denied the accusations in a statement sent by his wife, Cheri.
“The statements by the liquidators are both untrue and defamatory, and we will not be commenting on this matter in the media,” they said.