The Cape Town High Court granted a provisional liquidation order against Mirror Trading International (MTI) on Tuesday after two urgent applications last week brought by clients of the bitcoin trading operation that is said to have received about R9.45bn from investors.
The cases against the Stellenbosch-based trading outfit, which had been described as a scam and a Ponzi scheme by critics, were brought by investors who found themselves unable to access their funds. According to the provisional liquidation order, the sheriff of the court has been ordered to attach all MTI’s property in all provinces and provide an inventory to the master of the court.
The provisional liquidation order comes after repeated warnings by the Financial Sector Conduct Authority (FSCA) about MTI. The FSCA announced on December 17 that it believed MTI and its senior management were misleading clients and were involved in an illegal operation that contravened several laws. The FSCA also said MTI, which began operating in April 2019, was not licensed to provide financial services and had never applied for any such licence.
The FSCA said MTI’s modus operandi was to invite the public to register on its website and move their bitcoin from their bitcoin wallets to that of MTI, which was under the control of CEO Cornelius Johannes Steynberg. MTI then transferred the bitcoin to its foreign exchange platform “broker of choice”, FXChoice, a Belize-registered online trading platform.
When the FSCA contacted FXChoice it discovered that MTI had been using demo trading accounts rather than actual trading to provide its clients with false trading statements.
As a result, FXChoice froze the crypto-assets linked to MTI on its platform. FXChoice said MTI had transferred 1,846.72 bitcoin to its platform from January 29 2020 to June 3 2020, making a loss of 566.68 bitcoin, a capital loss of about 30%. This was despite claims by Steynberg that MTI was using a bot, or high frequency artificial intelligence (AI) trading, coupled with its own trading team to make trading decisions that resulted in average returns of 10% per month.
The FSCA also found that Steynberg had made use of another online trading platform called Trade300 to house clients’ crypto-assets. After trying to find information on Trade300 it discovered a website in the name of “Joe Steyn”, a known alias of Steynberg. After obtaining search and seizure warrants, which were executed at the homes of Steynberg and an associate, the FSCA found evidence on a desktop computer linking Trade300 to Steynberg.
MTI is suspected to have attracted as many as 280,000 members, who are believed to have transferred approximately R9.45bn in bitcoin to the company. News24 reported earlier that Steynberg is believed to have fled to Brazil earlier in December.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.