Author Archive

Ciaran Ryan

The Writer's Room is a curated by Ciaran Ryan, who has written on South African affairs for Sunday Times, Mail & Guardian, Financial Mail, Finweek, Noseweek, The Daily Telegraph, Forbes, USA Today, Acts Online and, among others. In between he manages a gold mining operation in Ghana, and previously worked in Congo. Most of his time is spent in the lovely city of Joburg.

Trailer hire companies not liable for customers’ traffic offences – court

Written by Ciaran Ryan. Posted in Journalism

That liability falls to the driver of the towing vehicle. From Moneyweb.

The transport minister’s counsel argued that where a trailer number plate obscures the plate of the towing vehicle, the trailer owner is the primary target for prosecution. Not so, said the court. Image: Moneyweb
The transport minister’s counsel argued that where a trailer number plate obscures the plate of the towing vehicle, the trailer owner is the primary target for prosecution. Not so, said the court. Image: Moneyweb

Trailer hire companies are clearly fed up with the mountain of traffic tickets accumulated by customers parking illegally, ignoring red lights and otherwise breaking the laws of the road.

For years, the police have been pinning the blame on trailer hire companies for offences committed by customers. This has created all sorts of difficulties: arrest warrants have been issued against the trailer owners, and traffic authorities have refused to issue renewal licences for their trailers or to renew drivers’ licences until all outstanding fines have been paid.

All of this came to a head earlier this month in the Supreme Court of Appeal when the minister of transport went head-to-head with Brackenfell Trailer Hire over the government’s interpretation of the National Road Traffic Act (NRTA). The act presumes the owner of an offending vehicle is also the driver in a case where the actual driver cannot be identified.

Brackenfell, which has 3 000 trailers for hire, originally argued before the Cape High Court that it could not be held responsible for the misbehaviour of customers, and the court agreed.

The minister of transport’s legal counsel argued that a trailer fell under the definition of ‘motor vehicle’ in the NRTA, which meant traffic authorities were within their rights to hold the trailer owner liable for offences.

Not a ‘motor vehicle’

“It is as well to remember that a ‘trailer’ is defined as a vehicle which is not self-propelled but rather designed or adapted to be drawn by a motor vehicle,” says the judgment.

Between the Cape High Court and the Supreme Court, there was much discussion about the dictionary and legal definitions of words like ‘drive’, ‘vehicle’ and ‘tow’.

Traffic authorities rely increasingly on surveillance cameras which often capture only the trailer number plate, not the towing vehicle. This left Brakenfell Trailer Hire and two other respondents to pick up the tab, and deal with the arrest warrants, for offences committed by customers.

“In those circumstances, the prosecuting authorities in whose area of jurisdiction the traffic offences concerned were committed, institute criminal proceedings against the owner of the vehicle whose registration number is depicted on the photograph, in this instance the trailer that is in tow,” reads the Supreme Court judgment.

Redirect process easier said than done

The Criminal Procedure Act allows for a ‘redirect process’ where the recipient of a traffic notice can provide prosecuting authorities with the particulars of the person driving the vehicle, but this is an imperfect system that often results in injustice.

Brackenfell and the other respondents were confronted with numerous arrest warrants for offences committed by customers. The impact of this was compounded by the fact that licensing authorities imposed an embargo against them renewing their drivers’ and motor vehicle licences.

The minister argued that trailer owners could use the redirect process in cases where a third party driver committed an offence. Where a trailer number plate obscures the plate of the towing vehicle, the trailer owner is the primary target for prosecution.

The Supreme Court dismissed the minister’s appeal against the earlier Cape High Court ruling, with costs.

Cigarette war goes radioactive

Written by Ciaran Ryan. Posted in Journalism

Tax justice group says two of every three cigarettes sold in SA is illicit, robbing the fiscus of R8bn a year. Small tobacco manufacturers say the group is a front for Big Tobacco. From Moneyweb.

It seems forcing smokers to get their fix illegally during the ban has normalised the act among retailers and consumers. Image: Shutterstock
It seems forcing smokers to get their fix illegally during the ban has normalised the act among retailers and consumers. Image: Shutterstock

A new report by Tax Justice SA (TJSA) finds that two of every three cigarettes sold in SA are illicit, making SA possibly the world’s largest black market for cigarettes.

This is costing the fiscus R8 billion a year. A TJSA researcher visited 43 retail outlets in four different cities and in all but one of these outlets was able to buy cigarettes for less than R20 a pack.

“TJSA considers all cigarettes sold at R25 a pack or below to be illicit, since such a price cannot possibly cover the cost of manufacture and distribution on top of the minimum collectible tax (MCT) of R20.01 due on each pack (R17.40 excise plus R2.61 Vat),” says the report, which formed the basis of a video documentary.

Read: Tobacco giant calls for zero tolerance on tax evasion by illicit suppliers

TJSA points the finger of blame at members of the Fair-Trade Independent Tobacco Association (Fita) and Gold Leaf Tobacco Corporation, which recently broke away from Fita.


The government placed a ban on all cigarette sales on March 27, 2020 to help slow the spread of Covid-19, but a study by University of Cape Town’s Research Unit on the Economics of Excisable Products (Reep) found that at the height of the ban, 93% of smokers were able to buy on the black market.

Read:Tobacco ban unconstitutional and invalid (Dec 14, 2020)

Government to appeal ruling against tobacco ban (Jan 5, 2021)

A Reep study in July 2020 showed that market share by multinational tobacco companies (British American Tobacco, Philip Morris International, Japan Tobacco International and Imperial Tobacco) had collapsed from 74% to just 17%.

The Reep authors have called for a substantial increase in excise duties on tobacco on the grounds that the market appears able to bear much higher prices.

“Tobacco control advocates agree with our recommendation that the excise tax be substantially increased and are calling for a doubling of the excise tax when the next budget is tabled in parliament,” says the Reep report. “The evidence from the surveys conducted by Reep suggests that this is feasible.”

Market share

Market share has slipped from multinational tobacco producers to “smaller” ones like Gold Leaf Tobacco, which Reep estimates captured a 26% share of the market, Carnilinx (14%) and Best Tobacco Company (11%).

When the ban was lifted on August 18 last year, after 144 days, the effect of lockdown on the smoking landscape became clearer.

Forcing smokers to buy illegally during the ban had normalised the act of selling and buying illicit brands for both retailers and consumers.

Fita brought a court action against the government late last year to have the ban lifted. This was ironic, noted Reep, as its member had benefitted disproportionately from the sales ban. “They have greatly increased their share of the market within our sample, and sold their cigarettes at hugely inflated prices.”

In December 2020, a Reep study found multinationals had lost between 10% and 14.4% market share, while local producers enjoyed market share gains of between 11% and 400%.

Individual companies’ share of cigarettes bought by survey respondents before, during, and after the sales ban

Source: Reep study, ‘Back to normal? Smoking and quitting behaviour in South Africa after the tobacco sales ban’, December 2020

Fita head Sinen Mnguni says the research by TJSA cannot be given credibility and accuses TJSA of being a front group for “Big Tobacco”.

“Until groups like Tax Justice South Africa play open cards and disclose who their funders are, their independence will continue to be questioned.”

The Reep study shows that cigarette prices went up an average of 5.8% after the ban was lifted.

Multinationals increased their prices by nearly 5%, compared with non-multinationals, which increased prices by 30%.

Pointing to the same Reep study relied on by TJSA, Mnguni says it shows the lowest average price of cigarettes was R23.60 for a pack of 20. “This suggests that the ultra-low-price cigarettes, which were a characteristic feature of the market before the lockdown, have largely disappeared. From a public health perspective this is good, because it will discourage cigarette use, especially among the poor sections of the population,” reads the Reep study.

Says Mnguni: “This is an independent study by Reep which contradicts TJSA’s claims based on anecdotal evidence of cigarettes being sold for less than R20 a pack.”

SA Tobacco Organisation questions TJSA’s integrity

A statement by another industry body, SA Tobacco Organisation (Sato), of which Gold Leaf Tobacco is the largest member, likewise questions the integrity of the TJSA Crimewatch documentary and says “there is no evidence to suggest the [scenes] have not been staged”.

“We have noted that Mr Yusuf Abramjee [TJSA’s founder] has repeatedly through the years defamed our member Gold Leaf Tobacco Company (GLTC),” says a statement issued on Thursday by Sato.

“His recurring theme, through his various forums over the years, makes it apparent that he is perpetuating a lie and targeting Gold Leaf Tobacco, seemingly at the instance (sic) of big tobacco. It is not difficult to see that the entire expose was a commercial for Big Tobacco.

“The show demonstrates Batsa [British American Tobacco SA] brands selling for R40-R50, whilst we were able to conduct a test purchase of a pack of 20 Rothman’s at R17.50 [a Batsa product]. These are matters which TJSA is silent on. Interestingly, TJSA is also silent on the much larger illicit industries, such as alcohol and fuel.”

Read: SA has the world’s biggest illegal tobacco trade: Batsa

And this from Sato: “We would like to invite all tobacco manufacturers, multinational and local, to open up [their] records for scrutiny by the public. We are confident that nearly all of the profits made by multinational players are being siphoned out of the South African economy, which amount to billions of rands, through complicated measures of profit-shifting and fancy royalty arrangements.

“These matters of such a serious nature, should be ventilated through our judicial system and investigated by the real law enforcers and not by speculative journalists.”

TJSA’s response

Replies TJSA founderAbramjee: “Fita’s response is a classic deflection tactic used to avoid having to explain why they and their members have been caught red-handed.

“Fita might claim their brands are in the clear but, as the report shows, two-thirds (23) of the 34 brands we bought at below the legal tax threshold (minimum collectible tax) were brands belonging to Fita members (15) or their breakaway partner Gold Leaf Tobacco Corporation (8).

“We bought Red & Black cigarettes, made by Fita member Afroberg, for just R7.20 a pack – a price that amounts to barely a third of the taxes that should have been paid on that pack (R20.01). A full list of the Fita brands sold at below MCT is contained in the report.

“This is industrial-scale tax evasion that is robbing South Africa of R8 billion a year. That’s enough money to vaccinate half of our population.

“Mr Mnguni should be investigating how his members’ products could possibly be selling at these blatantly criminal prices and robbing our nation of vital funds.”

Gold Leaf, says Sato, pays a steady R200 million to the SA fiscus each month. “Our member’s market share, as researched by independent researchers, confirms that our member’s sales are in conformity with [their] tax contributions, thereby rubbishing all and any allegations concerning any illicit activity of GLTC.”

Replying to Sato’s statement, TJSA says it “notes the libellous comments about our organisation and founder Yusuf Abramjee made by the spokesman for Sato, a body recently established as a front for its only member, [GLTC].

“TJSA stands by its independent investigation that showed eight brands belonging to GLTC being sold at prices below the MCT level. A full report, including hours of video footage, has been delivered to SA Police Service (Saps), SA Revenue Service (Sars) and the departments of finance, health and trade.

“TJSA would gladly accept Sato’s invitation to look at GLTC’s books to establish how their products are being sold at prices that suggest millions of rand are being evaded in tax.”

Two forex trading companies go belly-up, owing investors upwards of R1bn

Written by Ciaran Ryan. Posted in Journalism

Praesidium and Imagina FX were placed in liquidation last year after clients’ demands for refunds went unanswered. From Moneyweb.

Some say the number is closer to R2bn. Image: Shutterstock
Some say the number is closer to R2bn. Image: Shutterstock

As the bells were ringing in the 2019 New Year, Praesidium Global fired off a self-congratulatory newsletter to investors announcing that its Managed FX Fund had clocked up an astonishing return of 43.5% for the previous year.

Returns like this were apparently par for the course, ranging between 43.5% and 74.3% for each of the previous four years.

The newsletter goes on: “’Too good to be true’ is a statement we hear every day when new clients first learn about the kind of returns the Fund has been delivering year after year. And when comparing five-year total returns of Praesidium, to the performance of more familiar investment products, who could blame them!”

Praesidium apparently did this by investing in forex markets, managed by “an experienced team of traders”.

The author of the newsletter was Gary Wilde, Praesidium Global’s Indian Ocean Islands director, based in Mauritius.

As it turns out, it was too good to be true.

In June 2020, Praesidium Wealth investors received a newsletter with some alarming news. Covid was a “black swan” event that had created unprecedented volatility in world markets, resulting in a 40% drawdown in funds under investment. Praesidium, like many other investment companies, was not immune to this volatility.

But there was no need to worry, clients were told, as plans were being put in place to recover from these losses.

Some clients were less than satisfied at this sudden turn of events. They tell Moneyweb this was the first time in five years the company had reported losses. Some feared their entire investment was in danger of disappearing altogether.

Praesidium reassured investors that business continuity plans had been put in place. It also promised better and faster communications with clients, who were understandably concerned about the deteriorating trading results. The company decided to waive its usual performance fees on trading accounts until the drawdown losses were recovered.

The trading team also volunteered to put in extra hours of trading – which veteran traders would recognise as a sign of desperation, since more trading does not necessarily mean more profits (often, the reverse).

Big funds at risk

One investor contacted by Moneyweb has $1.9 million (R28.9 million) at risk in the company. Another overseas-based investor sunk $900 000 (R13.7 million) into the fund.

“We were introduced to the Praesidium by a friend when we were on a trip to Mauritius, with promises of returns of about 3% a month,” says the investor, who asked not to be named. “We initially put in $400 000, which went into a bank in Mauritius, and then later put in another $500 000, which went to Cyprus.”

Everything seemed to be going swimmingly for the first year. The investor was able to log into the company’s investment platform, which reflected steady growth in the account. It was only when she received the “black swan” letter notifying her of a 40% drawdown in the trading account that she started to ask questions. She was told that her funds were being traded through a platform called FXPrimus in Cyprus. She reached out to FXPrimus in Cyprus, which apparently had never heard of Praesidium.

It wasn’t looking good. An investigator who looked into this could find no event on the forex market that would account for a 40% drawdown.

It was the same story for Michael Suskin, a Pretoria-based entrepreneur who is owed about R12 million from an associated company called Imagina FX, under the direction of Cape Town-based Craig Massyn, the lead forex trader.

“Craig [Massyn] was an associate of mine,” says Suskin, a registered financial consultant who attended several courses in forex, but after hearing of the possibility of earning 2-2.5% a month, decided to invest with Imagina.

“I started investing in 2015 and I was seeing awesome returns. I asked Craig Massyn a lot questions before I started investing, and once I was satisfied, I placed my first investment in the first quarter of 2015, and made a few more allocations after that. I first got a bit concerned in March 2020 when I noticed a drop in the returns, which was the first time there was a drop since I started investing in 2015.”

Read: A ‘spaculative’ investment at best (Oct 2016)

Investors like Suskin were by now in panic mode, trying to withdraw their funds to protect whatever was left. Their requests for withdrawal were met with a string of messages explaining technical and regulatory hurdles that had to be crossed before money could be released. To date, investors contacted by Moneyweb have yet to receive a cent. Nor will they, until the liquidation process is finalised.


Praesidium and its sister company Imagina FX were placed in liquidation in October 2020 after investors approached the court saying they were unable to make withdrawals.

The question the liquidators are now trying to answer is whether there is anything left for investors.

There were three companies bearing the name Imagina: Imagina FX, Imagina Asset Management, and Imagina International Trading, based in Mauritius.

Shocking discovery

Not long after the “black swan” letter was sent out to investors, Chad Thomas of IRS Forensic Investigators was asked by an overseas client to see what he could sniff out. What he found was shocking.

“Investors were asking for refunds and they were getting the usual runaround with these types of schemes. My advice was to stop waiting and to proceed against the company for liquidation.”

Facebook and social media were now aflame with accusations of fraud by the directors of the company, which accusations were denied.

Theo van den Heever of D&T Trust was appointed provisional liquidator of Praesidium, and Christian Bester of Mazars was handed the task of lead provisional liquidator for Imagina FX.

Van den Heever says a check into the Praesidium bank account showed only R100 000 available as at October 2020.

The Financial Sector Conduct Authority (FSCA) has opened a forensic investigation to find out what happened to the money under Praesidium control, which Van den Heever estimates at north of R1 billion. Others put it closer to R2 billion.

Criminal cases have since been opened against Praesidium and Imagina.

The Imagina FX provisional liquidators asked the Cape High Court for extended powers to track down company assets, and on October 27 last year was granted an Anton Piller order to search (without warning) the business and residences of directors of the company for information. The sheriff executed the Anton Piller order the following day and came away with a trove of documents and information.

Ponzi scheme denial

Shaun Pienaar of Enderstein van der Merwe, the attorney for Massyn, tells Moneyweb the Anton Piller order was unlawfully executed, and denies his client was involved in a Ponzi scheme – which is what several investors allege.

“The sheriff took everything, didn’t identify evidence, and then handed that evidence over to the attorneys for the liquidators – which they are not allowed to do,” he says. “The sheriff is supposed to hold information (secured by an Anton Piller order) until the court decides what must be done with it.”

Replies Imagina FX liquidator Christian Bester: “This accusation is vehemently denied by the liquidators and forms part of the dispute that will be decided by the High Court on the 9th February 2021.”Read: Investment scams pop up like mushrooms

Massyn goes to court to challenge inquiry

Imagina FX was placed in final liquidation in November 2020. A Section 417 inquiry (in terms of the Companies Act) was convened on November 9 to question officers of the company in an attempt to find out what happened to investors’ funds.

Evidence from Carl Japhtes, a former director of Imagina FX, provided some clues as to what happened to the funds, but the picture remains murky.

It seems a substantial portion of funds was channelled into Octox, one of the companies allegedly controlled by Massyn.

Massyn, his wife and sister-in-law were due to give evidence to the 417 inquiry in November, but applied to the Cape High Court to set aside their subpoenas. When this was rejected by the high court, Massyn told the inquiry he was in the process of preparing an application to rescind the order convening the 417 inquiry. He is also challenging the legality of the Anton Piller order which resulted in the seizure of digital data and documents from his home and office.

While Massyn is taking his battle to the courts, his fellow director Andrew Cunningham-Moorat has provided authorities, including the police, with a statement.

The first meeting of creditors was held on December 18, 2020 when claims of R94.6 million were admitted, but the full amount of funds invested far exceeds this, according to those involved in the case.

One investigator, who asked not to be named, says he is aware of at least three clients who invested about R50 million each.

And it seems at least one investor placed more than R100 million into the scheme.

A clearer picture of the extent of the damage awaits the second creditors’ meeting, when more claims will accounted for.

“Mr Massyn has unfortunately frustrated the process by not assisting us with all the requested documentation and information with regard to the whereabouts of the funds and it would appear that the bulk of the investors’ funds have been misappropriated,” wrote Bester in a note to creditors on November 25 last year.

Pierre du Toit, an attorney at Mostert & Bosman which represents the liquidators of Imagina FX and Praesidium, told Moneyweb that Massyn had exclusive control over all of the funds entrusted to Imagina FX for investment.

“Massyn blatantly refuses to comply with his legal and moral duties to tell investors what he had done with their hard-earned funds. Instead, he utilises all available avenues of delaying tactics to prevent being questioned under oath,” says Du Toit.

“The question is not whether Massyn will have to testify, but only when.”

FSCA weighs in

In May 2020, the FSCA suspended the licence of Praesidium Advisory Services “due to information received indicating the possible misuse of its FSP [Financial Services Provider] licence.”

This was after receiving complaints from investors alleging that Praesidium Advisory may be operating an unapproved foreign collective investment scheme and soliciting investments from members of the public.

“The complainants are also concerned that Praesidium Advisory offers returns as high as 40% per annum,” reads the FSCA statement.

“The public’s attention is drawn to the fact that the Praesidium Global Fund and/or the Praesidium Mauritius Managed Fund, which is being offered by Praesidium Advisory to members of the public, has not been approved by the FSCA. Upon concluding its investigation, the FSCA will decide whether to withdraw the FSP licence or lift the suspension.”

The FSCA’s head of enforcement, Gerhard van Deventer, tells Moneyweb that a forensic investigation is still ongoing to ascertain how much money was involved and where it went.

“From our investigations so far there does not appear to be any evidence of substantial trading going on within Praesidium or Imagina FX,” he says.

“Money came in through various companies and then appears to have been co-mingled with funds in offshore accounts.”

The FSCA says it is awaiting information from the Mauritius Financial Services Commission and other foreign regulators to see who controlled the offshore accounts. Also being awaited are statements detailing the transactions executed on the accounts.

The forensic investigators are now attempting to unscramble the Praesidium/Imagina omelette to see if any funds remain to be returned to investors. This is likely to be a long and potentially disappointing process for investors.

Anyone with further information on the case can contract Captain Laas, working with Johannesburg Commercial Crimes Unit, at 084 782 2026.

MTI profiteers could be asked to pay back the money

Written by Ciaran Ryan. Posted in Journalism

Criminal case opened. Liquidators will have to track down thousands of investors using nothing more than emails. From Moneyweb.

Image: Chris Ratcliffe/Bloomberg
Image: Chris Ratcliffe/Bloomberg

The Financial Sector Conduct Authority (FSCA) has completed its investigation into Mirror Trading International (MTI). The bad news for many MTI investors who received payouts from the bitcoin investment scheme is that they may be asked to pay back the money.

Bitcoin investment scheme MTI collapsed in December after raking in an estimated 23 000 bitcoin worth R13.3 billion from thousands of investors around the world.

Head of enforcement at the FSCA, Brandon Topham, says the authority will first share its report with recently-appointed liquidators, which should assist them in their recovery of funds.

“The FSCA understands that the liquidators are of the view that the funds or assets received by certain members of the public pursuant to investing with MTI, may be unlawful,” read a statement by the authority released on Tuesday.

“The liquidators intend to recover such funds and assets from these investors – a course of action that the FSCA supports. Affected investors are requested to contact the liquidators in this regard.

“Although the main FSCA investigation has been completed, the authority has opened a criminal case with the Commercial Crime Unit and will assist the NPA (National Prosecuting Authority) with its responsibilities. It will also assist the liquidators in their extensive task of completing the liquidation and subsequent distributions. The authority is also working with foreign regulators to ensure that MTI’s unlawful activities are not perpetuated in other jurisdictions.

“The FSCA will now consider administrative actions to be taken against the individuals and entities involved in the matter.”

Successful strategy

MTI was structured as a multi-level marketing scheme that rewarded members for signing up new investors, for which they could earn 10% commissions on sums invested. MTI was astonishingly successful at attracting new investors, even after repeated warnings by the FSCA to steer clear of the company and its promises of returns.

FSCA investigating Mirror Trading International (Aug 19, 2020)
Get-rich-quick scheme pulls a crowd, despite regulators calling time-out (Aug 28, 2020)

The MTI database was recently hacked by Anonymous ZA and, if accurate, appears to show some outrageous returns being earned by the founders of the scheme. The lead earner managed to accumulate more than R100 million by building a massive downline numbering thousands of members, on which he was able to earn commissions. Another lead member started with $100 in April 2019 and ended up making R37 million 20 months later.

Investors, come clean

Topham advises those who earned money through MTI to voluntarily contact the liquidators and provide details about their earnings, rather than wait for the liquidators to track them down.

The task is complicated by the fact that the only contact for many members is an email address. It is likely that the liquidators will concentrate on big hitters who earned large returns through the scheme.

Given the 280 000 members who signed up for the scheme, the liquidators have a huge task ahead of them to track them all down. Not all of these are likely to be genuine accounts. One investigator told Moneyweb that many of these accounts were opened in the name of fictitious people, including family pets, in order to earn additional commissions.


MTI was placed in provisional liquidation earlier this month after investors reported that they were unable to make withdrawals, thereby committing an act of insolvency.

Liquidators swarm MTI (Dec 23)
MTI placed in provisional liquidation and damage could be huge (Dec 29)
MTI: Provisional liquidators appointed (Jan 13)

The appointed liquidators are Mr. AW van Rooyen (Investrust Insolvency Practitioners), Mr. H Bester (Tygerberg Trustees), Mrs. J Barnard and Mrs. D Basson (Tshwane Trust Co).

“Anyone who intends to lodge a claim with the liquidators, or who has information that can be of assistance, may contact the liquidators through their websites. The websites will also be utilised to communicate information to the public,” says the FSCA statement.

The websites for submitting claims are: and

Claim forms will be available on the website within the next few days.

MTN loses appeal, must pay dealer R11.4m in damages

Written by Ciaran Ryan. Posted in Journalism

MTN claimed a dealer was trying to hide 15 items of obsolete stock from an internal auditor. The court didn’t buy this version. From Moneyweb.

Image: Moneyweb

The Supreme Court of Appeal this week threw out MTN’s appeal against a judgment ordering it to pay R11.4 million in damages, plus interest, to a dealer whose business was shut down in 2011 for breach of contract.

MTN had accused the dealer, Belet Industries, of dishonesty after an internal auditor arrived at one of the two stores operated by the company. The general manager of the store instructed shop assistants to place 15 obsolete items considered unnecessary to the audit in black bags and keep them outside the shop until the audit was complete.

To MTN, this looked like an attempt to hide something from the auditor.

Based on the Supreme Court judgment, this seems to have been a rather expensive audit for MTN. The auditor may have been looking for something that wasn’t there to be found.

MTN claimed the 15 “hidden” items were grey goods that the shop was not authorised to stock in terms of the contract with the network provider, and that by placing them outside, the store was obstructing the audit process. MTN felt it could no longer trust the dealer and cancelled its agreement with Belet in September 2011. The breach was so severe, claimed MTN, that it could not be remedied, not even by the payment of money.

Belet had an entirely different view of what transpired.

The 15 items were either obsolete or defective and did not form part of the MTN audit. Nor were they hidden. They were simply placed outside the store so as not to be counted as stock.

“MTN dispossessed Belet of its business by placing guards outside both stores and refusing Belet access to the stores, taking back all stock, terminating the electronic access to the systems needed to trade and refusing to supply further stock,” reads the judgment.

MTN then notified the landlords of the two stores that it had terminated the dealer agreement, and substituted itself as the lessee until new dealers could be appointed.

In December 2011, Belet sued for damages in the Joburg High Court on the basis that MTN had breached or repudiated the dealer agreement. The high court awarded R11.4 million plus interest, which was based on the expected profit had Belet been allowed to continue operating for another 10 years.

MTN defended the action, claiming that in addition to the dishonesty of hiding unauthorised stock from the auditor, Belet had failed to record stock on a new management operating system that dealers were obliged to use.

The Supreme Court found several inconsistencies in MTN’s arguments, among them changing reasons for the cancellation of the dealer agreement.

When it came to the issue of damages, MTN argued that the second store at Jubilee Mall in Gauteng was not part of the agreement with Belet, which had both stores shut down as a result of the cancellation of the agreement. Belet argued that it should be compensated for the closure of both stores.

“On the undisputed facts the (Johannesburg High Court) was correct in finding that MTN, having relied on the Jubilee Mall store being subject to the agreement, could not now, when sued, contend that it was not. MTN conducted two audits of this store. It would, but for the provisions of the agreement, have had no right to do so. It set performance targets for this store.”

MTN’s appeal against the earlier Joburg High Court ruling was dismissed with costs.

Evidence that banks sell repossessed houses for cents in the rand

Written by Ciaran Ryan. Posted in Journalism

According to an affidavit filed in support of the R60bn class action suit by dispossessed homeowners against major banks. From Moneyweb.

In the 200 worst cases the properties were sold for less than 17.2% of their market value. Dozens were sold for less than 1%. Image: Shutterstock
In the 200 worst cases the properties were sold for less than 17.2% of their market value. Dozens were sold for less than 1%. Image: Shutterstock

It’s been known for years that the banks have been flogging off repossessed properties for a fraction of their market worth, but the evidence was anecdotal and fragmented. Not anymore.

An affidavit filed in support of the R60 billion class action suit brought by Lungelo Ditokelo Human Rights Foundation against the major banks, based on a sample of about 12 000 repossessed properties, found that these properties were sold for 50-60% of their proper value, mainly through sheriff’s auctions.

The class action suit, which is being defended by the banks, seeks to recover billions of rands in lost home equity as a result of this practice.

What’s disturbing about this evidence is how far out of line SA is with practices elsewhere in the world.

“Our South African banks sell property about five times more than the international average as a percentage of the total number of outstanding bonds and 20 times more than best practice,” says Garth Zietsman, a statistician who analysed data from the National Credit Regulator.

Even more disturbing is that the poor are worst affected.

Lower valued homes were sold for about 40% of their market value, against 81% for the higher valued ones.

According to the evidence

The evidence shows dozens of properties were sold for less than 1% of their market value. Of the 200 worst cases, all were sold for less than 17.2% of their market value.

The banks have yet to file their replies to the case.

In one case highlighted by Zietsman, a R1.3 million property was sold for R1 000 at auction.

In this case, the lending bank was FNB. Standard Bank and Nedbank also had several properties selling at auction for R1 000 when the market value was R200 000 to R440 000. There is no comparable data available for Absa.

As can be seen from the banks’ responses below, it seems the rates of evictions and properties ending up in sale in execution (auction) has declined during the Covid crisis. Banks say they are endeavouring to assist clients in difficulties through various interventions (see below).

Zietsman’s analysis focuses on sales of repossessed properties from 2011 to 2014, before new court rules came into effect obliging banks to establish a reserve (or floor) price before auctioning properties.Read: Banks slapped down over home repossessions in Joburg court case

Prior to this, properties could be sold without floor prices, resulting in some being sold for as little as R100 and even R10.

Practices such as this gave rise to claims that criminal syndicates were operating out of the sheriffs’ offices.


King Sibiya, head of the Lungelo Ditokelo Human Rights Foundation, is not convinced of the banks’ self-proclaimed virtue and argues that SA has among the most inhumane practices in the world when it comes to bank repossessions.

“Here we are in the middle of a Covid crisis when millions of people have fallen into arrears on their homes through no fault of their own, and the government imagines it is business as usual, where banks can carry on like they have done for decades. Eighty percent of the cases before the high courts are brought by banks attempting to recover debts and evict people from their homes.

Read: Judges give banks a grilling over home repo practices 

“Other countries impacted by Covid put a total freeze on evictions, while we imposed a freeze of three months. Three months? There’s no justice in that.

Zoom justice

“We have default judgments being handed down by Zoom judges because people cannot attend court in person to defend themselves,” says Sibiya.

“But then the sheriff comes to evict them, and that is not virtual. That is real.”

He adds: “People have no idea how to access this virtual justice system – which is in itself a denial of people’s constitutional rights of access to justice.”

The Foundation says it will be lobbying the Department of Justice to put a total freeze on evictions while the Covid crisis is still in effect. “People will get thrown out of their houses in the thousands, and make no mistake – that is when you will see a Covid crisis out of control,” says Sibiya.

The bogus arrears matter

Analysis by consumer advocate Leonard Benjamin suggests that many properties are being repossessed over bogus arrears figures. Homeowners are being sued for arrears that have effectively been written off, due to a practice known as “double dipping”.

Benjamin says the banks are automatically spreading any arrears over the remaining term of the loan each time interest rates are adjusted, which has the effect of extinguishing the arrears. All the customer has to do is pay the new, adjusted instalment to catch up on any outstanding amount owed. Yet the banks continue to pursue customers through the courts for the lump sum arrears. The UK courts ruled against the banks on double-dipping – something local banks have denied doing

.Read: Standard Bank accused of ‘double dipping’ in home repo case

Advocate Douglas Shaw, who is representing the Foundation in its class action suit, says the banks resisted the introduction of a reserve price system at sheriffs’ auctions which would allow homeowners an opportunity to recover some of the equity in their properties.

Now that reserve pricing is part of the law, the banks are still managing to game the system by arguing cases in the high courts instead of the magistrates courts, driving people further into arrears through higher legal costs, and by setting reserve prices so low as to prejudice the defaulting homeowner.

“The government needs to treat this as a national crisis and put a freeze on evictions until the Covid crisis has been handled,” says Sibiya.

FNB’s response

How many mortgages (and what percentage of mortgage accounts) are now in arrears as a result of lockdown difficulties or rescheduled arrangements?

Our stance is to assist customers and only as a last resort to proceed with litigation. Over the course of Covid-19 and the lockdown, we have focused on trying to assist customers via our Cashflow Relief programmes. During the hard lockdown period, litigation was suspended.

What percentage of these cases proceed to sale in execution (ie. sheriff’s auction)?

Refer to question 1 re: suspended litigation during this period.

What steps are being taken to accommodate mortgage customers in difficulty as a result of Covid-related loss of income?

From 1 April 2020, FNB assisted customers with a customer-centric Cashflow Relief Plan to cover all instalments that a qualifying customer has with us. Our Cashflow relief was for a period of 3-months at prime interest rates with a flexible repayment term. Furthermore, a number of pre-selected customers were offered extended relief for a further 3-months, totalling a 6-month payment break. Our Cashflow Relief Plan covered our customers’ instalments across credit, insurance and FNB Connect repayments. We are committed to helping customers to minimise the impact of Covid-19 on their finance and continue to evaluate our assistance for customers on individual merits.

Nedbank’s response

Nedbank will respond, as appropriate, to the allegations contained in Garth Zietsman’s affidavit as part of those court proceedings. We do however wish to clarify that the assertion that properties are sold in execution for negligible amounts can be misleading if the complete context (as discussed below) is not provided.

The reserve price for sales in execution, being the minimum price at which the property can be auctioned for, is currently determined by the courts. This has been the position since December 2017. Prior to this, in any instance where Nedbank itself purchased a property at a sale in execution, the client’s account would always be credited with the fair market value of the property irrespective of the price at which Nedbank would purchase the property for. The client’s loan account would therefore reduce with the fair market value of the property and any surplus would be for the client’s benefit. The property would then be marketed for sale or auctioned by Nedbank, with a view to achieve the best price possible. If the property is sold or auctioned at a price which is higher than the fair market value, resultant profits (if any), after any [outstanding amounts] on the loan and property expenses are settled, are paid to the client. Nedbank receives no profit from these sales.

We are currently in a closed period (for financial reporting), and unfortunately not able to provide the stats requested. Nedbank has several options available to assist customers who are experiencing financial difficulties, such as payment arrangements and restructures. Each case is assessed on its individual circumstances and an appropriate assistance option is provided. We encourage customers who are experiencing difficulties in meeting their obligations to contact us as soon as possible. There are various ways for the clients to reach us. They can either go online via the Nedbank website, MoneyApp, or call the dedicated call centre number (0860 110 702).

Standard Bank’s response

Many customers fear telling their bank that they are not in a position to make a payment on a loan, however, the more engaged customers are, the more likely they are to keep their homes. It is important to remember, it is not in the bank’s interest to repossess properties our aim is to try to help customers keep their properties wherever we can.

Since the start of the Covid-19 pandemic Standard Bank has offered instalment relief for personal and business banking customers across its markets in Africa. It has also partnered with both private and public sector to provide debt and payment relief for small businesses across the continent.

We continue to engage with each of our clients based on their individual needs on a client-by-client basis. We have also encouraged all our clients to contact us as soon as possible if they are concerned that they are facing, or will face, financial distress. We have committed to do everything in our power to assist.

The nature of this will differ per customer and over the lockdown may have received a payment holiday, during which time they need not make any payments or may be allowed to make part-payments, while others may benefit from an extended home loan term with lower monthly payments.

As economies have opened, our clients have required less support, and many have resumed their payments. At the end of September, the PBB [Personal and Business Banking] SA client relief portfolio had declined from R107 billion to R61 billion, with mortgage lending relief reducing at the same rate. The vast majority of clients are up to date with mortgage lending instalments. This has also been assisted by the favourable interest rates which are at historically low levels.

In the extremely unfortunate outcome of repossession, a process that is governed the courts, properties are auctioned by the sheriff of the high court and minimum reserve price for these auctions are also set by the courts as a result to amendments Rule 46 (of the high court rules). Despite the setting of reserve prices, recovery rates are significantly impacted by condition of the property but more importantly the level of arrear rates and taxes as well as levies. These repossessions accounted for less than 0.02% of properties bonded with Standard Bank. This reduced by 60% as a result of the national lockdown. As the lockdown level have eased it expected to return to levels seen prior lockdown.

However, when a property is attached, everybody loses and therefore this process is only utilised when all other avenues to assist the rehabilitation the customer has been exhausted. We actively look at alternatives for our customers. Standard Bank’s EasySell process is in place to help such customers. This ensures that the best price possible is obtained for the property, the bond is settled and customer’s get their credit record back on track. Standard Bank, via the EasySell programme, also offers customers the benefit of reducing the outstanding balance. To date EasySell has assisted in excess of 4 000 customers via this programme.

Government wants to track you from cradle to grave

Written by Ciaran Ryan. Posted in Journalism

Under a new ID system that is being sold to us as gender-fluid and in keeping with best practice. From DearSA.

The surveillance state wants new tools to track you

The government’s draft official Identity Management Policy was released on 22 December 2020, just before Christmas.

Publishing something just before Christmas is a tried and trusted tactic in the news business if you want to bury a potentially acrid story.

The Department of Home Affairs wants a new randomised ID that allows for sex alterations, links you to your parents, captures your biometric information at birth and then later in life, and all this in the interests of serving you better as a governing body.

Reading the sales pitch for this policy document, you might think “fine, okay, I don’t really see how this will help me, but I’ll go with it.”

Is it just me, or is this a tyrant’s wet dream?

The document is freighted with roseate buzz words like “international best practice”, “respect for privacy” and “interoperability”.

Let’s pause right there. What is meant by “interoperability”? Essentially, gathering every bit of information possible on everyone in the country and sharing this “between identity subsystems” and other domestic and international jurisdictions.

SA’s ID system is not currently integrated and interoperable with those of other African countries and the EU, and that’s about to be rectified. Even the most venal of sins committed in SA will be shared with other jurisdictions. It’s already happened in the tax sphere, where jurisdictions share information through what is called Common Reporting Standards. In other words, South African expatriates under new rules to be introduced in March 2021 can be hunted down anywhere in the world for taxes owing.

The sharing of data between “jurisdictions” is about to get a lot more fluid. One of the justifications for this is combatting organised crime. The new draft proposal wants to capture facial and other biometrics, like fingerprints – which should make capturing criminals a doddle, right? How’s that worked out so far?

This begins to take on the vague outlines of China’s Social Credit System, where eating or playing loud music on public transit systems earn you demerit points on your social credit score, as do traffic violations, failure to sort your waste, cheating in exams, jaywalking, and cheating in online video games. Making blood donations and volunteering work hours can earn you back points. The list of potential ways to earn demerit points is too long to list here, but you can take a look yourself. It’s pretty frightening. Snitching on religious minorities is encouraged, and there’s an app to track “deadbeat debtors” – those who owe money.

Viewed through this prism, your conduct in life determines the extent to which you are declared a person or a non-person. Consider that as of June 2019, nearly 27 million Chinese citizens were denied high-speed rail tickets based on their social credit score, and by July 2019 2.56 million were denied flight tickets.

Is this what’s in store for us?

There’s been little discussion around this draft ID system – which is in itself a worry. Any proposed change in the law must be subject to rigorous cross-examination from the viewpoint of socio-economic impacts.  

Anyone watching the farce of the US election – and the ability of people with no ID to vote and potentially skew an election – may be wondering what’s wrong with our system of national IDs. Americans have resisted the idea of a national ID for decades on the basis this is an infringement of privacy and Constitutional rights, though they have something approximating this in the form of a Social Security Number. Then, of course, they have state drivers’ licences. There are multiple ways to track US citizens, with or without a national ID.

It seems our elections are far more trustworthy, if only because you have to have a national ID and then register to vote.

South Africans long ago accepted the national ID as a fact of life. ID numbers were introduced under the 1950 Population Registration Act as a way of keeping tabs on different racial groups. What was an apartheid contrivance has served the ANC well, which introduced the Identification Act in 1997. The original aim of racial profiling is still very much alive today, but this new ID system will expand it well beyond that.

What’s wrong with the current system?

So, what’s wrong with the current ID system that it needs a complete overhaul?

And what kind of an overhaul is contemplated by the Department of Home Affairs (DHA), the government entity responsible for ID management?

To find this out, we go to “Problem Analysis” in the draft policy document. The Identification Act is now more than 20 years old, needs modernising, will help deliver e-government and e-commerce services to those in need, and all the other motivations that typically accompany a proposal such as this.

The Identification Act of 1997 was enacted for the purposes of maintaining a population register and to enable government to issue ID cards. Section 7 of the Act obligates the Director-General to issue ID numbers in a way that details date of birth, gender and whether a citizen of resident.

The current ID system and how it works

Here’s how it works. The existing national ID comprises a 13-digit code as follows: YYMMDDSSSSCAZ.

The first six digits represent the date of birth, and the next four digits (SSSS) are based on gender. The next digit “C” shows if you are a South African citizen – 0 being a citizen, 1 being a permanent resident.

The last digit (Z) is what is called a “checksum” which is a statistical check that the number sequence is correct.

Here’s how it will change under the proposed new system

ID numbers will be based on parents: the ID number of a child must be processed on the basis of biographic information and linked to their parents’ ID numbers and mother’s biometric data.

Recognition of other sex/gender categories – The new legislation and population register must make a provision that enables the establishment of a category that is neither male nor female.

Random unique identity number – Another option is to issue a random unique identity number that is not linked to or founded on a person’s sex/gender, date of birth, place of birth or any other marker.

Records of persons throughout their lifespan – Every birth that takes place in the country must be registered. If possible, the biometrics of children must be captured at birth. Where impossible, the biometrics of a parent must be linked to the birth certificate of a child.

Re-registration – Children must be reregistered when they reach age five with 10 fingerprints and iris and facial photographs. A combination of different biometric data for children should be considered with options such as the photograph of the ear.

The capturing and management of this data will fall under the National Identity System, or NIS, which will link with both government and non-government databases, such as banks and retailers. On the government side, health and education data will round off a near full picture of the citizen.

It’s not hard to see how the Chinese credit scoring system is but a hop, skip and a jump away for South Africans. Also linked to the NIS data are the issue of passports, immigration and refugee data. As some have remarked, it’s almost as if the Chinese government wrote the policy document for us.

The government plans to hoover up every bit of data it can on you and your children yet to be born. What’s also clear from the document is that government plans to monetise (sell) this data. This should concern us on several fronts: state security agencies have been implicated in extrajudicial surveillance against SA citizens, while law enforcement bodies appear to have an extremely wide interpretation of their powers under the Criminal Procedure Act to gather up cell phone subscriber records (having obtained 70,000 such records, according to Right to Know).

Where does privacy fit into this?

Section 14 of the Constitutes guarantees the right to privacy, which includes the right not to have your person or home searched; your property searched; possessions seized; or privacy of communications infringed.

Though the draft ID document makes multiple mentions of privacy, most of these relate to data privacy – but even that must be regarded with suspicion, as we have seen a number of devastating breaches of data security (and privacy) at the hands of companies like Experian. There may be severe penalties for mishandling of private data under the Protection of Personal Information (POPI) Act, but that’s no guarantee of anything placed in the custody of a new, and massive, government bureaucracy.

All this is being sold to us as a way to afford rights to non-traditional gender groups, and to accelerate transformation and government services to those in need. It ticks all the right boxes. But we had better know what we are signing on to.

Have your say

Have your say on this policy document here.

Finalmente Global placed in final liquidation as MTI dominoes start falling

Written by Ciaran Ryan. Posted in Journalism

Pretoria High Court skips the provisional step and jumps straight to final liquidation for the first MTI-linked organisation to fall. More are expected. From Moneyweb.

Fletcher says Finalmente can be classified as a multi-level marketing scheme where investors or members earn commissions for introducing new members.
Fletcher says Finalmente can be classified as a multi-level marketing scheme where investors or members earn commissions for introducing new members.

Finalmente Global, a company which purported to be an advertising company but appears to have been linked to the now-collapsed Mirror Trading International (MTI), was placed in final liquidation in the Pretoria High Court on January 12.

This follows an application to the court by three Finalmente Global investors: Robert and Candice Fletcher, and Marcel Beech.

Robert Fletcher’s affidavit says he is owed R847 800 by Finalmente, or about 1.5 bitcoin. An investigator for the applicants says upwards of R500 million could be at risk in the scheme.

The sole director of the company was Kobus van der Merwe, who “failed to ensure proper management and good governance of the company, and should the liquidation be granted the assets which consist of the bitcoins of the members of (Finalmente) which are still in the possession of the company may be misappropriated.”

No-one from Finalmente turned up to defend the action.

As Moneyweb previously reported, Finalmente Global purported to be an internet advertising company that could generate returns of 106% by buying bulk ads and selling them for a profit. It apparently did this by encouraging investors to ‘lend’ bitcoin, much of which was channelled to MTI.

In late December Finalmente wrote to investors claiming MTI’s well-reported difficulties had nothing to do with it, and there was no affiliation between the two. Then last week it sent out another message saying that due to the demise of MTI, Finalmente had lost a substantial amount of money from a loss of advertising revenue as well as investments it had placed in the company.

MTI: Provisional liquidators appointed (13 Jan, 2021)
FBI jumps onto MTI investigation (Jan 4, 2021)
Liquidators swarm MTI (Dec 23, 2020)
MTI CEO goes AWOL, lawyers pull out (Dec 22, 2020)

Fletcher’s affidavit lays out the background to Finalmente, saying it was registered as a cryptocurrency trader in 2019 and solicited bitcoin from members of the public. Investors were then instructed to move bitcoin to a wallet controlled by Finalmente, at which point investors lost control of their crypto assets.

This bitcoin was supposedly traded on a trading platform, though there appears to be no evidence of this. Fletcher says Finalmente can be classified as a multi-level marketing scheme where investors or members earn commissions for introducing new members. Trading profits from the scheme would be reflected in the investor’s Finalmente account, to which would be added commissions from new investors introduced.

“(Finalmente’s) business model was set up to function as a ‘referral’ structure, the purpose of this was to recruit new investors/members on a daily basis in order to generate income.”

Fletcher says he got involved when a friend introduced him to the scheme, which was offering returns of up to 7% a week. He originally invested R155 000 and was so impressed with the reported growth that he subsequently invested further amounts.

The total amount invested by the three applicants in the case came to R1.2 million. When Fletcher tried to withdraw R59 000 on January 4, 2021, he received a “pending withdrawal” notification, but no money was ever paid over to him.

Based on this, and the messages from Finalmente saying it could no longer continue operating, the company is both factually and commercially insolvent and it was therefore just and equitable to wind it up, says Fletcher’s affidavit.

In his affidavit Fletcher alleges that Finalmente is involved in illicit business dealings and an urgent liquidation is required to trace all wallets containing bitcoin belonging to investors.

Liquidators are expected to be appointed by the court in the coming days, and will then be tasked with tracing whatever assets remain in the company.

MTI: Provisional liquidators appointed

Written by Ciaran Ryan. Posted in Journalism

Have until March 1 to prepare a report before final liquidation order can be granted. From Moneyweb.

The first meeting of creditors will take place six to eight weeks after the final liquidation order is granted. Image: Shutterstock
The first meeting of creditors will take place six to eight weeks after the final liquidation order is granted. Image: Shutterstock

The Master of the Cape High Court has appointed four provisional liquidators to track down whatever assets they can from Mirror Trading International (MTI), the bitcoin investment scheme that stopped paying out members’ requests for withdrawals in December after its CEO, Johann Steynberg, went Awol.

FBI jumps onto MTI investigation (Jan 4, 2021)
Liquidators swarm MTI (Dec 23, 2020)
MTI CEO goes AWOL, lawyers pull out (Dec 22, 2020)

The four provisional liquidators appointed are AW van Rooyen, H Bester, Jacolien Frieda Barnard, and Deidre Basson.

MTI hoovered up an estimated 23 000 bitcoin, currently valued at about R12.5 billion, by the time it shut down in December.

It promised investors up to 10% return a month using a computerised trading system, first trading forex, then bitcoin, although the Financial Sector Conduct Authority (FSCA) could not find any evidence of trading success by the company.

The FSCA alerted the public to the dangers of investing with MTI last year and advised members to ask for their money back.

Despite this, the volume of bitcoin flowing to MTI appeared to grow as the company put out messages claiming the FSCA had overreached its powers and had no jurisdiction over it.

A leaked Zoom meeting between senior MTI executives and leaders seems to suggest no-one had any idea it was all a scam, and pinned the blame on the now missing CEO Steynberg, who is reckoned to control about 7 000 bitcoin worth about R3.8 billion. He is believed to be in Brazil. Angry MTI members posting on social media are not buying the claim that Steynberg acted alone.

The provisional liquidators will now commence the task of tracking down and taking control of the assets and liabilities of MTI.


There will also likely be a Section 417/418 inquiry in terms of the Companies Act to interrogate executives of the company to find out what happened in the company and, more particularly, what happened to the assets.

MTI members hoping for a quick recovery of assets may be disappointed, as the scale and complexity of the investigation will likely take several years before there is any finality. The provisional liquidators have until March 1 to submit a report detailing the assets and liabilities of MTI, at which point a final liquidation order will likely be granted.

Anyuschka Nett, senior attorney with Luitingh Attorneys, says creditors can now start to submit claims in anticipation of the final liquidation order being granted.

“There is a risk, however, depending on the scale of any shortfall in assets, that some members may have to contribute to the costs of the liquidation. We will only know this once we have the report from the provisional liquidators.”

Nett says the first meeting of creditors will take place six to eight weeks after the final liquidation order is granted. At the first meeting of creditors, claims will have to be lodged and creditors will be allowed to vote on the appointment of a final liquidator.

The provisional liquidators appointed were recommended by Recovery Action Group (RAG), a group of MTI members hoping to recover some of their investments.


There are various international law enforcement teams looking at the MTI scam, with trackers being placed on bitcoin wallets linked to MTI and its leaders to make sure bitcoin are not transferred to third parties. reports blockchain intelligence firm Whitestream as saying some MTI bitcoin were sent to crypto “mixers” which is a way of attempting to hide the source of the bitcoin.

Whitestream says this is a common tactic used by “other popular Ponzi schemes we already saw this year”.

Cyber security and crypto expert Vaughn Victor says “mixers” such as the Wasabi wallet are often used to hide bitcoin movements, but are only partially effective.

“It’s a more complicated process to track bitcoin going into and out of a Wasabi and other mixer wallets, but it can be done. Most people using wallets like this are doing it for criminal purposes.”

Due to the volume of claims involved, creditors are being encouraged to lodge claims even before the final liquidation order is granted, and can do so here.

RAG is posting regular news updates on MTI, Finalmente Global and other suspected bitcoin scams here.

The provisional liquidators will also communicate separately with creditors in the coming weeks.

Is there a crypto bubble anywhere in sight?

Written by Ciaran Ryan. Posted in Journalism

With bitcoin’s 20% drop in three days, some of the air has started wheezing out of the bubble. From Moneyweb.

While a bitcoin correction would not be surprising, the rise in ‘cold’ wallet storage indicates that buyers have little intention of selling. Image: Shutterstock
While a bitcoin correction would not be surprising, the rise in ‘cold’ wallet storage indicates that buyers have little intention of selling. Image: Shutterstock

Veteran crypto investors have seen this picture before. Bitcoin nearly doubled since the beginning of December to January 8, 2021, then the bubble started to blow off some steam with a 20% price drop in the last three days.

It’s much the same story for Ethereum, Litecoin, Bitcoin Cash and other cryptocurrencies, all of them virtually doubling over a period of five weeks. Ethereum is down 24% in the last two days after coming within a whisker of its previous all-time high of $1 450.

The spectacle of Trump supporters invading Capital Hill last week and the aftermath of a contested election only fuelled an already white-hot crypto furnace.

The last time we saw something like this was in December 2017, when the bitcoin price almost doubled to $20 000. Last week, bitcoin hit $41 000, more than doubling its price in little over a month, before dropping 20%.

Why Bitcoin’s price is at an all-time high (Jan 8)
Two-day bitcoin plunge shakes faith in cryptocurrency boom (Jan 11)

After the 2017 peak, the price crashed by 84% over the next year before beginning a slow recovery. This time analysts are suggesting the price drop is unlikely to be as severe, in large measure because of substantial institutional buying power now being firehosed into cryptos.

But the parabolic rise in the bitcoin price over the last month puts it into seriously overbought territory, and a correction is overdue.

Bitcoin price in USD

Source: CoinDesk

The flow of institutional money into bitcoin could get a whole lot bigger should the US Securities Exchange Commission approve a bitcoin exchange-traded fund (ETF) this year. While this should be positive for bitcoin in the longer term, in the near term it could have a negative impact on price, according to a recent report from JP Morgan.

Many institutions hunting for exposure to bitcoin are required to do so by buying shares in Grayscale Bitcoin Trust, for which they pay a premium to net asset value. JP Morgan argues the arrival of a bitcoin ETF would reduce this premium and result in some of these institutions selling out of Grayscale once the six month lock-up period expires.

While that might hurt the bitcoin price in the short term, there seems little prospect of a drop similar to that of 2018.

Read: After bitcoin’s explosive rally in 2020, what will 2021 bring?

According to this analysis by, bitcoin’s price has broken out of its rising channel, which is a positive indicator. “This signals an even stronger growth rate. There is no resistance in the price chart and further rise is indicated. In case of a negative reaction, the stock has support at approximately $19 000.”


A recent report by Kraken Intelligence identifies number of reasons for the recent surge in cryptos:

  1. Big Buying: Institutional adoption continued as companies such as MassMutual, SkyBridge Capital and One River Asset Management made multimillion-dollar Bitcoin allocations, while the CME announced it would offer ETH futures and Dow Jones said it will provide cryptocurrency indices in 2021.
  2. More room for upside: The most recent parabolic run has left plenty of room for speculation among believers and sceptics. The technicals provide a much simpler picture – there is room for upside. Kraken projects prices could continue even higher, as history shows major crypto market tops often reach specific multiples of major indicators.
  3. Correlation to riskier markets: A tighter correlation between bitcoin and riskier traditional assets has emerged.

“Notwithstanding bitcoin and the broader market’s momentum since October 2020, it ought to be noted that January is, on average, the second most volatile and third worst-performing month on record. Not to mention, when looking at historical first quarter returns, one can see that the first quarter is typically a negative yielding period for bitcoin,” says Kraken Intelligence.

Bitcoin ‘whales’ – those with more than 100 bitcoin – accumulated an additional 47 500 bitcoin during the cryptocurrency’s ruthless December rally.

This was accompanied by bitcoin buyers taking purchases offline, storing crypto assets in ‘cold’ wallets (disconnected from the internet, to safeguard against hacking). This is a signal that they have little intention of selling.

In prior bull markets, bitcoin has traded up anywhere from 10 to 15 times its 200-week moving average, which is currently around $8 000. If history is any guide, this would imply a price of between $79 040 and $118 560, says Kraken Intelligence.