In a landmark decision, a British court has recognised the South African liquidators overseeing the Mirror Trading International (MTI) bitcoin Ponzi and pyramid scheme as the designated bankruptcy proceeding under UK law. The ruling follows similar recognitions in the US, Canada, Belgium, and Australia. MTI, launched in 2019, promised monthly bitcoin growth with a network marketing system. Liquidators are pursuing funds globally, targeting 5,250 Australians. The scheme collapsed in 2020 after its CEO went missing. Legal proceedings continue, revealing a complex web of international cryptocurrency fraud.
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By Jan Vermeulen
A British court has recognised the South African liquidators of bitcoin Ponzi and pyramid scheme Mirror Trading International as the designated bankruptcy proceeding under UK law.
Specialist insolvency publication Global Restructuring Review reported that Judge Catherine Burton in the Insolvency and Companies Court of England and Wales recognised the South African liquidation on 19 December 2023.
Represented by South Square’s Charlotte Cooke, the liquidators said they intend to continue their investigation and correspond with UK-based members of the scheme.
The UK ruling comes after the South African liquidators received similar recognition in the US, Canada, Belgium, and Australia.
Sydney Morning Herald reported that the liquidators aim to claw back money from 5,250 Australians believed to have profited from Mirror Trading International (MTI).
The liquidators applied to be recognised as the designated foreign representative in the United States after the Commodity Futures Trading Commission (CFTC) filed a claim for $1,733,838,372 (R33 billion) against the scheme.
This would have siphoned all the money available to pay victims (and the liquidators and their lawyers) to the US government.
The CFTC made a deal with the liquidators not to take any action to collect payment while bankruptcy proceedings are underway.
MTI launched in South Africa in 2019, with reports from anonymous insiders indicating that it started off as a copy-trading scheme. It launched a network marketing system after taking a series of devastating losses.
The scheme promised to grow members’ bitcoin with monthly yields averaging 10% and offered a way for participants to earn substantial commissions for recruiting more people into the scheme.
Its membership exploded in 2020 after implementing the network marketing scheme, fuelled by people being ordered to shelter in place around the world.
It is considered the biggest in South Africa’s history because the liquidators estimated in court documents that 29,421 bitcoins flowed through the scheme.
MTI’s liquidators filed court documents estimating 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, RSG Geldsake with Moneyweb reported that around 39,000 bitcoins had been deposited into the scheme and 32,000 withdrawn — leaving a difference of roughly 7,000 bitcoins.
Using the current bitcoin price of around R795,000, even the lower estimate values MTI at R23.4 billion.
Acting Western Cape High Court judge Alma de Wet ruled in April 2023 that MTI was a pyramid and a Ponzi-type scam.
Former MTI referral programme head and 50% shareholder Clynton Marks has applied twice to appeal the ruling. Neither application was granted.
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.
Financial regulators globally also started issuing warnings against MTI, including South Africa’s own Financial Sector Conduct Authority, which orchestrated a dawn raid of its offices.
The scheme collapsed after MTI CEO Johann Steynberg travelled to Brazil and went missing in December 2020.
Liquidation proceedings were instituted soon thereafter, and the final liquidation order was granted in June 2021.
Steynberg was eventually arrested in Brazil in December 2021.
Goiás police had reportedly located Steynberg in the state capital of Goiânia and arrested him for using forged identity documents.
He was tried and found guilty. While his sentence was commuted to a substantial fine, it appears that Steynberg remains in custody pending extradition proceedings.
Court documents revealed that Steynberg had been living the high life while hiding in Brazil, including using a helicopter for leisure transportation.
He also bought properties under the names of two girlfriends whose company he had kept at different times while living in different cities.
Most recently, allegations surfaced in Goiás that prison officials had granted Steynberg unauthorised computer and Internet access while detained.
Goiás Penal System Employees Union president Maxsuel Miranda das Neves alleged that on at least one occasion, Steynberg and his lawyer were alone in the prison director’s office, where there was computer and Internet access.
Neves said the authorities must answer whether he used the computer because he is internationally accused of cryptocurrency-related fraud.
The Goiás State General Directorate of Penitentiary Administration stated that it had launched an internal investigation to investigate the complaint.
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- MTI – SA’s largest Ponzi scheme topples prompting crypto crackdown
This article was first published by MyBroadband and is republished with permission