The Master of the Court has accepted hundreds of claims against bitcoin scam Mirror Trading International (MTI), MyBroadband has learned.
According to a source with knowledge of the proceedings, the Master accepted 967 claims and rejected five.
MTI’s liquidators told MyBroadband that it seemed as though most of the claims against the failed scheme were accepted during a meeting at the Master’s office.
However, this doesn’t necessarily mean that they will pay out all of the claims — they must first be examined.
The MTI liquidators met with Master’s office representative Zukile Mabusela on Friday, 8 April 2022.
They quietly gave notice of the meeting in the Government Gazette on 11 March.
The liquidators have now committed to advertising each special meeting of creditors on the Investrust and Tygerberg Trustees websites.
Initially scheduled for 1 April, the meeting was postponed as Mabusela could not preside over it due to unforeseen circumstances.
“The rejection or acceptance of the claims is subject to the discretion of the presiding officer at the Office of the Master of the Supreme Court,” a spokesperson for the liquidators told MyBroadband.
“Section 45 of the Insolvency Act stipulates that the liquidators must examine all accepted claims,” they explained.
“If the liquidators find that the claims are correct, the claims are finally accepted. However, if some claims are not correct or invalid, those claims are rejected in terms of the Insolvency Act.”
To date, the liquidators have scrutinised around 3,200 claims. A further 4,700 claims have been received from investors since December 2021, which are being processed.
The liquidators are also awaiting the Getaquid’s claims (estimated at 15,000) and Hendrik van Staden’s group of approximately 4,000 claims.
They struck a deal with Getaquid to fast-track the payout a percentage of approved claims — up to 20% — provided MTI is declared a pyramid scheme. The deal is open to other creditors.
“Creditors that have claims against MTI are requested to submit their claims,” the liquidators urged.
Claims will be lodged in batches of a thousand with the Master at special meetings of creditors.
Another source who asked not to be identified, as they were not authorised to speak to the media, said it was difficult to distinguish who the real victims were.
They explained that some MTI “investors” would deposit bitcoin into one account, wait for profits to compound, then withdraw it all and deposit it into a new account.
However, to try and trick the liquidators, the person submits their claim based only on the deposits in the second (or third or fourth) account.
This is significant because creditors cannot add their profits from the scheme to their claims.
They must instead subtract any withdrawals from their claims.
Therefore, many former MTI members may be required to pay back funds they withdrew from the scheme.
According to the liquidators, this is one of the reasons they applied to have the High Court declare MTI a pyramid scheme.
With MTI declared an unlawful scheme, the liquidators said they would not have to repeatedly prove its unlawfulness in court to recover ill-gotten gains from “net-winners”.
Some former members raised concerns that having MTI declared an unlawful scheme would cause its assets to be forfeited to the state.
However, the liquidators said that this was false. Once a liquidation was in place, it trumped asset forfeiture.
Chainalysis named MTI the biggest cryptocurrency scam of 2020.
Mirror Trading International was a network marketing scam claiming to offer automated trading services — initially in forex and later in cryptocurrency derivatives.
Members deposited bitcoin into the scheme and it delivered consistent profits, promising an average of 10% per month.
MyBroadband exposed the inner workings of MTI in September 2020 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 vanished, apparently while travelling in Brazil.
Steynberg was arrested in Brazil on 29 December 2021, a year after he disappeared. He allegedly presented fake identification to law enforcement officers.
Liquidators recovered 1,281 bitcoin in early 2021 from Belize-based brokerage FXChoice with the help of South Africa’s Financial Sector Conduct Authority, immediately selling it for around R1.1 billion.
Court documents last estimated that 29,421.03379 bitcoin flowed through MTI — R17.6 billion at current exchange rates.
A source with knowledge of the case told MyBroadband that a subsequent analysis revealed that over 46,000 bitcoin (R27.6 billion) passed through the scheme.