Big winners in Mirror Trading International scam — liquidators blow R113 million

Mirror Trading International’s liquidators have spent R90,243,021.55 on lawyers and consultants since taking control of the Bitcoin-based network marketing scam’s estate.

In total, they have disbursed R113,007,185.31 and set aside R135,017,551.60 as their fee for when the case is finalised.

This is according to a Provisional Liquidators Account MyBroadband has seen.

The document also shows the liquidators have only recovered an additional R14 million for the money they’ve spent.

No money has been repaid to victims or “net losers” of the scheme.

Mirror Trading International (MTI) was a scheme that started in South Africa, promising to grow members’ Bitcoin with yields averaging 10% per month.

Members could also obtain substantial bonuses by recruiting more people into the scheme.

Thanks to this pyramidal structure, it drew in members worldwide.

Chainalysis named it the biggest cryptocurrency scam of 2020.

However, it should be noted that MTI has not formally been declared a pyramid or Ponzi scheme, as the judge presiding over the case, Alma de Wet, adjourned the case towards the end of 2022 and reserved her judgement.

Former Western Cape judge president John Hlophe recently grilled De Wet for the number of deferred cases she has outstanding.

President Cyril Ramaphosa suspended Hlope in December on the advice of the Judicial Services Commission (JSC). A JSC tribunal had found that Hlope attempted to influence two Constitutional Court justices in a case involving former president Jacob Zuma.

Patricia Goliath is acting as Western Cape judge president in Hlope’s place.

Drama in South Africa’s judiciary notwithstanding, MTI made headlines in September 2020 when a group calling itself Anonymous ZA exploited vulnerabilities in its poorly-coded website.

Together with a MyBroadband journalist and community members, the group exposed the inner workings of MTI.

The scheme finally collapsed in December 2020 when MTI CEO Johann Steynberg disappeared while travelling in Brazil.

Steynberg resurfaced almost exactly a year later when Brazilian law enforcement arrested him for allegedly presenting a fake ID.

MTI was put into provisional liquidation on 29 December 2020, and De Wet granted a final liquidation order against the scheme on 30 June 2021.

By sheer stroke of luck, and with the help of the Financial Sector Conduct Authority, the liquidators recovered 1,281 Bitcoin that MTI’s former brokerage, FXChoice, had frozen.

They immediately sold the Bitcoin on the cryptocurrency exchange Luno at a relatively favourable price, banking close to R1.1 billion for the estate.

Since then, the document suggests the liquidators have gone to tremendous expense to recover additional funds.

They itemise R46,613,872.48 for legal expenses related to interrogations, investigations, and transcription.

Another R16,696,086.72 was paid for “crypto investigation services”.

However, for this expenditure, the liquidators have only recovered R14,175,149.04 as of 23 January 2023.

It is understood the liquidators expect an exponential increase in the amount of money recovered from MTI’s “net-winners” in time. It is unclear how much expenditure will also increase during the time it takes to finalise the case.

Other legal fees and costs came to R26,246,633.52, with R22,457,902.25 set aside for the taxman.

MyBroadband contacted MTI’s liquidators for comment, and they stated the document we saw was an internal concept document that had not yet been tabled in the public domain.

The liquidators declined to answer further questions about the accuracy of the figures on the record.

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Now read: High court grants huge provisional order in Mirror Trading International case