Major court ruling about South Africa’s biggest pyramid scheme in history

Acting Justice Alan Maher has delivered a ruling in the liquidation of Mirror Trading International, providing the curators direction on dealing with various claims against what remains of the billion-rand estate.

He also declared that Bitcoin is a form of digital money, albeit not recognised as legal tender in South Africa, and should be treated as intangible, movable property.

Mirror Trading International (MTI) was a Bitcoin-based network marketing scam that began in South Africa and drew in members worldwide.

MTI made headlines in September 2020 when a group calling itself Anonymous ZA exploited vulnerabilities in the scheme’s poorly-coded website.

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

In mid-December 2020, MTI CEO Johann Steynberg disappeared while travelling in Brazil, and MTI collapsed. Liquidation proceedings were instituted shortly after that.

Steynberg was arrested in Brazil almost exactly a year later for allegedly showing false identity documents to police. He was tried and found guilty of using forged documents in Brazil and faces extradition to South Africa.

Johann Steynberg, former Mirror Trading International CEO arrested in Brazil in December 2021

The liquidators approached the Western Cape High Court on 17 August 2022 with an urgent and ex parte application for guidance on how to treat the Bitcoin deposits and withdrawals in MTI.

Ex parte means the application was brought with the aim of not allowing input from opposition parties. However, the judge at the time declined to hear the application on that basis.

In essence, the liquidators wanted to know whether to convert Bitcoin amounts to Rand values and what exchange rates to use.

In his ruling, Maher provided for three types of investors.

These are net losers who made no withdrawals, net losers who made some withdrawals but didn’t make a profit, and net winners.

He also considers two different scenarios.

In the first scenario, MTI is an unlawful scheme and investment agreements are considered void from the beginning (void ab initio).

Under this scenario, investors may submit claims to the value of their deposits using the Bitcoin exchange rate at the time of the deposit.

Similarly, withdrawal values are calculated using the Bitcoin exchange rate at the time funds were extracted out of the scheme.

Maher also leaves the door open for the liquidators to claw back withdrawals from net winners and losers.

These include withdrawals made six months before the scheme was placed under liquidation, and those where undue preference was given to some investors.

Net winners have no initial claim against the estate. Once the liquidators have clawed back dispositions from these investors, they can attempt to prove a claim against the estate.

For the second scenario, where agreements between investors and MTI are not considered void, Maher ruled that the value of Bitcoin claims must be calculated on the date of liquidation.

“Such claims are to represent the available balance of the relevant investor’s investment(s) in question after taking into account ‘Bitcoin in and Bitcoin out’,” Maher stated.

Despite providing guidance for both scenarios, Maher said he believes it is unlikely MTI would be found to be anything except a Ponzi-type scheme.

Johann Steynberg, former Mirror Trading International CEO

Acting High Court Judge Alma de Wet previously ruled that MTI was an unlawful scheme, explicitly calling it a pyramid and a Ponzi-type scheme.

Maher said it is unlikely De Wet’s ruling would be overturned.

The exact size of MTI has been a moving target. Previous court documents estimated that 29,421 bitcoins flowed through the scheme.

Sources with knowledge of the case told MyBroadband the actual number is closer to 46,000 bitcoins.

Most recently, Geldsake (Afrikaans wordplay “money-matters” or “money-business”) reported that around 39,000 bitcoins had been deposited into the scheme and 32,000 withdrawn — leaving a difference of roughly 7,000 bitcoin.

Regardless of which number you use, MTI is the biggest pyramid or Ponzi-like scheme in South Africa’s history.

Using the current bitcoin price of around R699,000, even the lower estimate values MTI at R20.6 billion.

For comparison, the recent BHI Trust Ponzi scheme has been valued at around R3 billion.

Travel Ventures International was reportedly a R4 billion pyramid scheme.

The value of Africrypt is disputed, but the most realistic estimates valued the scheme at between R200 million and R1 billion.

MTI’s liquidators have already recovered close to R1.1 billion with the help of the Financial Sector Conduct Authority — mostly by sheer stroke of luck.

The liquidators recovered 1,281 bitcoins that MTI’s former brokerage, FXChoice, had frozen.

According to FXChoice, it had frozen the funds in June 2020 after detecting suspicious activity on the account and conducting an internal investigation.

The first official warning about MTI, issued by the Texas Securities Commission, only came out about a month later.

Thanks to FXChoice’s swift action and the timing of MTI’s liquidation, the liquidators banked over a billion rand by selling the bitcoins on Luno.

Of this, just under R635 million remains.


According to MTI’s first liquidation and distribution account (L&D) lodged with the Master’s Office in Cape Town last month, lawyers and the South African Revenue Service have already claimed hundreds of millions from the estate.

The liquidators arranged to receive a R120-million initial payment despite not returning any money to proven creditors of the scheme.

Lawyers and advocates working on the estate have also received a combined R185 million, invoicing for interrogations, crypto investigations, and legal costs relating to launching and defending various court proceedings.

The taxman got over R283 million to settle a dispute with the liquidators over unpaid taxes. SARS will also receive another R29.6 million in income taxes.

The liquidators previously told MyBroadband that they were waiting for this ruling before declaring a first dividend for proven creditors.

Reports quoting the liquidators said net losers could expect to receive between 50% and 60% of their money back with the initial dividend.

However, the liquidators would not confirm the exact amount when we asked them about it.

They said how much they will pay each creditor changes all the time as they receive more claims.

MyBroadband contacted MTI’s liquidators for comment on the ruling and when creditors could expect the first dividend, but they did not respond to our query.

Update: Following publication, the liquidators provided the following statement.

The liquidators are delighted by the verdict, and it now puts us in a position to consider and quantify the claims for the purposes of inclusion in a liquidation and distribution account so that the creditors can receive a dividend.

We have also, in the meantime, and on 2 November 2023, received judgment in the Section 387(4) Application for confirmation by the court of the settlement between the liquidators and SARS.

Paying a dividend to the creditors is an administrative process subject to a questionnaire from the Master, which will be answered. The Master draws up the questionnaire based on items listed in the L&D account. After the liquidators have responded to the questionnaire to the Master’s satisfaction, the account is validated, and if no further objections are made, a certificate is issued by the Master. The process of paying dividends can then start.

The timeline is influenced by, among other things, the nature of the questions in the questionnaire, so it is premature to now say with certainty when the first dividend will be paid.

Now read: Lawyers score R185 million payday on South Africa’s biggest pyramid scheme in history — and try to hide it

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Major court ruling about South Africa’s biggest pyramid scheme in history