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 Lewrockwell.com, 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.

FSCA opens criminal case against MTI, says investigation ‘nearly complete’

Written by Ciaran Ryan. Posted in Journalism

MTI responds that this is another attempt by the FSCA to destroy its business. From Moneyweb.

The FSCA says it has, in the last few days, received complaints that investors were unable to redeem their investments. Image: Shutterstock
The FSCA says it has, in the last few days, received complaints that investors were unable to redeem their investments. Image: Shutterstock

The Financial Sector Conduct Authority (FSCA) says it has opened a criminal case against Mirror Trading International (MTI) and on Thursday issued a statement providing details of its investigation into the company, which it says is nearing completion.

Last month the FSCA conducted a search and seizure raid on the offices of MTI and the homes of some of its executives, after previously warning the public against investing in the company which has been promoting its bitcoin investment scheme with returns of up to 10% a month.

Despite the FSCA warnings, the number of MTI customers appears to be growing. Marketing executive Cheri Marks told Moneyweb that the company now had 280 000 customers worldwide.

“The Authority [FSCA] believes that MTI and its senior management are conducting an illegal operation, misleading clients and have contravened several laws,” says the FSCA statement.

Read:Joining MTI may end in tears (Aug 20)

Get-rich-quick scheme pulls a crowd, despite regulators calling time-out (Aug 28)

Anonymous data dump ‘spills the beans’ on Mirror Trading International (Sep 21)

MTI plans countersuit after FSCA raid on offices and homes of execs (Oct 28)

Marks said she was not aware of any criminal case against MTI.

Head of investigations at the FSCA, Brandon Topham, says the case was opened on November 12 in Stellenbosch (where MTI’s head office is located) under case number 245/11/2020.

The FSCA maintains that MTI is trading illegally and requires a financial services provider licence – which it does not have. MTI argues that its activities fall outside the jurisdiction of the FSCA, though it would be happy to comply with proposed regulations if and when these are introduced.

Crypto survey puts bitcoin at $36 600 in 2021

Written by Ciaran Ryan. Posted in Journalism

That’s another 90% gain on top of the 190% gain for 2020. But Ethereum’s the cryptocurrency to watch next year, according to a survey. From Moneyweb.

The total market cap of all stablecoins stood at nearly $24bn in November, up 360% from the $4.8bn at the start of the year. Image: Bloomberg
The total market cap of all stablecoins stood at nearly $24bn in November, up 360% from the $4.8bn at the start of the year. Image: Bloomberg

Bitcoin’s price is expected to hit $36 602 in 2021, and ether is forecast to reach $1 451, extending its phenomenal 340% sprint so far this year.

This is according to the latest Kraken Crypto Sentiment Survey for the second half of 2020. Kraken is one of the world’s largest crypto exchanges.

This is not always an accurate picture of how the market plays out.

When the same survey was conducted in the first half of 2020, Kraken investors forecast a price target of $22 866 for bitcoin (it is now about $19 145) and $810 for ether (this week trading at $583).

Do lockdowns work?

Written by Ciaran Ryan. Posted in Journalism

In halting the spread of the virus, the evidence is patchy. In strangling economies, that’s more certain. From Moneyweb.

While they are justified as necessary to save lives, the economic effects of lockdowns are devastating, with spending plummeting to all-time lows. Image: Waldo Swiegers, Bloomberg
While they are justified as necessary to save lives, the economic effects of lockdowns are devastating, with spending plummeting to all-time lows. Image: Waldo Swiegers, Bloomberg

Recent research by accounting software company QuickBooks provides a fascinating view into the global impact of Covid-19 lockdowns on economic performance.

The table below lays it out. It compares days in lockdown with expected economic performance in 2020.

Russia’s economy is expected to contract 26% this year with just 43 days in lockdown. The UK went 99 days in hard lockdown and its economy is likely to contract 19% this year.

Then comes SA: a 16% economic contraction with 60 days of lockdown (before lockdown restrictions were relaxed).

The hard lockdowns and shuttering of businesses such as restaurants and hotels had a devastating economic impact.

Difficult decision

“Policymakers have had the difficult decision of when to implement lockdown, the severity of restrictions, and how long to keep measures in place for,” says the QuickBooks study.

“Lockdown restrictions have been met with both open arms and criticism in places all over the world. For example, in South Africa, the strictest measures were put in place to combat some of the highest levels of the virus. The country banned the sale of alcohol and tobacco.”

The countries with the most severe economic contractions are:

  1. Russia (26%)
  2. UK (19%)
  3. South Africa (16%)
  4. Spain (14%)
  5. Hungary (14%)

The countries with the lowest economic contraction of GDP are:

  1. Australia (5%)
  2. Switzerland (8%)
  3. Canada (8%)
  4. Italy (10%)
  5. Norway (11%)

The UK experienced the longest lockdown, followed by Spain.

Three of the five countries that have spent the least amount of time in lockdown have experienced the lowest contraction in GDP. Switzerland experienced 42 days in lockdown, and Australia and Canada 49 days.

CountryDates in lockdownDays in lockdownGDP 2019 ($)GDP 2020 forecast ($)% change
Russia30 March – 12 May431 700 billion1 250 billion-26%
UK16 March – 23 June992 827 billion2 280 billion-19%
South Africa26 March – 25 May60351 billion295 billion-16%
Spain14 March – 20 June981 394 billion1 200 billion-14%
Hungary28 March – 6 June70161 billion139 billion-14%
France17 March – 11 May552 715 billion2 400 billion-12%
Germany22 March – 20 April293 845 billion3 400 billion-12%
Norway12 March – 15 June95403 billion360 billion-11%
Italy9 March – 18 May702 001 billion1 800 billion-10%
Canada16 March – 4 May491 736 billion1 590 billion-8%
Switzerland16 March – 27 April42703 billion650 billion-8%
Australia20 March – 8 May491 392 billion1 320 billion-5%

* The United States did not enter an overall nationwide lockdown. Rather, each state had its own lockdown. Source: QuickBooks, Trading Economics.

Bitcoin’s smaller brother Ethereum has been the crypto star of 2020

Written by Ciaran Ryan. Posted in Journalism

The Ethereum bubble popped in 2018, but 2020 was the year it came back to life. From Moneyweb.

ETH is volatile and prone to crazy price swings, so take the usual cautions before taking the plunge. Image: Shutterstock

ETH is volatile and prone to crazy price swings, so take the usual cautions before taking the plunge. Image: Shutterstock

Bitcoin may have grabbed the headlines in 2020 with a price gain of 160% for the year to date, but this pales alongside its smaller brother, Ethereum, which clocked up a gain of 344% so far this year.

Bitcoin’s market cap of $355 billion is more than five times that of Ethereum’s $67 billion, showing the huge gap between the crypto market leader and the number two.

Ethereum price in USD

Source: CoinDesk

While bitcoin’s impressive rally in 2020 was driven by Covid-related fears of monetary debasement and growing institutional adoption, ether’s rise came from steady development of the type of ‘smart contracts’ on which its value depends.

Watch out for a repo frenzy

Written by Ciaran Ryan. Posted in Journalism

A blizzard of summonses has hit consumers who fell into arrears during lockdown. The advice from consumer advocates: defend these and tell your side of the story to the court. From Moneyweb.

Start paying whatever you can as soon as you can – judges view such attempts in a very positive light. Image: Shutterstock
Start paying whatever you can as soon as you can – judges view such attempts in a very positive light. Image: Shutterstock

There won’t be much Christmas cheer for thousands of South Africans who fell into arrears on their mortgages and vehicle payments through no fault of their own.

The banks extended a three-month repayment holiday at the start of the lockdown, but started cranking out the summonses as soon as it was over. Household incomes across the board have been hammered by the lockdowns and there’s little prospect of catching up on these arrears.

Government appears to have little concern for the plight of South Africans now at risk of losing their houses and cars.

It was disclosed in Transaction Capital’s recent year-end results that as at June 2020, 23% of vehicle and mortgage accounts were in arrears, as were 77% of unsecured lending accounts.

‘Humanitarian crisis’

“This is a humanitarian crisis and yet we continue like it’s business as usual, as if consumers fell into arrears out of their own neglect,” says King Sibiya, CEO of Lungelo Ditokelo Human Rights Foundation, which provides legal defence against unlawful evictions by the banks.

Sibiya says the foundation has seen a spike in attempts to repossess homes in the last few months.

“People have lost their jobs, or suffered a drop in income, and now they are supposed to be able to catch up on arrears or face eviction. Where is the justice in all this?”

Sibiya is lobbying to prevent any South African facing foreclosure from having their cases heard without legal representation.


Court ruling: you can’t dodge a debt by converting a CC to a company

Written by Ciaran Ryan. Posted in Journalism

The debt will follow you, according to the Supreme Court. From Moneyweb.

Image: Shutterstock
Image: Shutterstock

Converting a close corporation (CC) to a company might seem like a clever way of dodging a suretyship, but it won’t work.

That was the finding of the Supreme Court of Appeal (SCA), which last month ruled against Masibuyisane Services (Pty) Ltd, which in 2006 had converted from a CC and in doing so argued that a suretyship signed in the name of the CC was not enforceable.

Masibuyisane could never quite make up its mind whether it wanted to be a company or CC. In 2009, it re-converted to a CC and then in 2013 went back to being a company.

The CC had signed surety for a leasing agreement between Maze Products and Eqstra Corporation, which in 2014 sued Masibuyisane Services as surety for the debt owed by Maze.

“The controversy, in this case, is one that only lawyers could appreciate. It concerns the consequences of a close corporation (CC) converting itself into a company,” reads the judgment.

“What happens if after that conversion a contract is concluded by the directors of the company in which contract the company is described as a close corporation? Can the company repudiate it on the grounds that it was concluded with an entity, ie the CC, that ‘no longer exists’?”

Judgment was originally granted in 2014 against Masibuyisane CC as one of four defendants that had signed surety for the debt. The sheriff serving the writ of execution to recover the owed money found nothing of value and was told the business had changed to Masibuyisane (Pty) Ltd.

How to exit the financial matrix using cryptos

Written by Ciaran Ryan. Posted in Journalism

AltCoinTrader CEO and founder Richard de Sousa on a new way to get out of debt and transact, but in the crypto sphere. From Moneyweb Crypto.

AltCoinTrader CEO and founder Richard de Sousa explains how he discovered an entirely new way to get out of debt, transact and do everything you would normally do with a bank, but in the crypto sphere. De Sousa also breaks down how he bought a R650 000 property in the west of Johannesburg and ended up paying just R200 000 for it – using a novel crypto financing method.

Why bitcoin’s 2020 surge is different from 2017

Written by Ciaran Ryan. Posted in Journalism

Institutional backers have now jumped on board in numbers. From Moneyweb.

Billionaires, funds and celebrities are buying bitcoin, which has shown its capacity to protect against inflation. Image: Chris Ratcliffe, Bloomberg
Billionaires, funds and celebrities are buying bitcoin, which has shown its capacity to protect against inflation. Image: Chris Ratcliffe, Bloomberg

It was the year of the bitcoin bubble, 2017. Over the following year it lost 84% of its value, falling from $20 000 to $3 200, but is now back within shouting distance of its all-time high.

What’s different this time is the shift in institutional sentiment, something that was largely absent in 2017.

Coindesk provides a list of crypto-related developments in just the last few weeks that demonstrate this shift.

Billionaire hedge fund manager Paul Tudor Jones told Yahoo Finance that bitcoin reminded him of the internet in 1999, when no one knew how to value internet stocks because of the world of possibilities that lay ahead.

He sees only one direction for bitcoin, and that’s up: “I’m going to assume that it’s the wrong price for the possibilities that it has. And I’m going to assume that the path forward from here is north.”

Read: Bitcoin is the bubble that keeps on giving

On CNBC, BlackRock CEO Larry Fink said bitcoin has “caught the attention” of many people and that the cryptocurrency market is still relatively small compared with others.

Nedbank blown in high court appeal involving Cape Town Fish Market

Written by Ciaran Ryan. Posted in Journalism

There was much argument as to the meaning of the word ‘towards’, as Nedbank attempted to claim more than the amount agreed with and paid by the liquidated branch of the restaurant chain. From Moneyweb.

The word featured in a ‘Deed of settlement’ in which no provision was made for any future payments. Image: Shutterstock
The word featured in a ‘Deed of settlement’ in which no provision was made for any future payments. Image: Shutterstock

The Polokwane High Court didn’t buy Nedbank’s attempt to claim more than the R800 000 it agreed to in terms of a settlement agreement with the liquidated Cape Town Fish Market Polokwane.

The case originally went the way of the bank, but was overturned last month on appeal.

When the Cape Town Fish Market (CTFM) in Polokwane was placed in liquidation in 2017, it ended up owing Nedbank nearly R1.5 million under a term loan and a current account.

Three parties signed sureties for the loans – Charles and Amanda Stopforth and Busesi Investment 183, the defendants in the case. They signed a deed of settlement with the bank to make payment of R800 000 on or before September 30, 2017, in which case Nedbank would forego any legal action against them for the debt.

Read: Nedbank’s results: Weak economy knocking financial services

Nedbank claimed this was just part-payment and that it was entitled to claim the balance outstanding.

Different understanding

The defendants had a completely different understanding of the agreement: that the R800 000, which was paid before the due date, was in full and final settlement of any and all claims against them.

A potentially disastrous change in voting methods averted in SA

Written by Ciaran Ryan. Posted in Journalism

Thanks largely to a robust campaign by participative democracy group DearSA, the government has decided to ditch two clauses in the Electoral Laws Amendment Bill – which would have allowed a change in voting methods.

DearSA-electronic-vote

These clauses would have allowed a switch from the current paper ballots to electronic voting – potentially sparking the kind of controversy and allegations of fraud now surrounding the recent US Presidential election.

Cybersecurity experts and lawyers have warned of the potential for hacking such electronic systems, and many have cautioned against adopting systems prone to abuse by malign actors.

On Wednesday, 2 December 2020, the Portfolio Committee on Home Affairs approved the Electoral Laws Amendment Bill and said will recommend to the National Assembly to adopt it – but without the disputed clauses 14 and 21 which would have empowered the Electoral Commission of South Africa (IEC) to prescribe a different voting method.

“The committee agreed that voting method is a policy matter that cannot be left to the IEC alone to decide, even though the IEC had mentioned that the intention was to only allow for testing of such alternatives,” says a press release issued by Parliament this week.

Parliament acknowledges the role played by DearSA in having these clauses removed from the Bill. It notes the concerns raised by members of the public in the 12,305 submissions received.

The Electoral Laws Amendment Bill seeks to amend three pieces of legislation:
· the Electoral Commission Act, 1996;
· the Electoral Act, 1998; and,
· the Local Government: Municipal Electoral Act, 2000.

These amendments were deemed necessary to prepare for the forthcoming general local government elections in 2021.

DearSA director Rob Hutchinson says removal of the concerning clauses is as a direct result of the work done by DearSA and the IRR – who brought attention to potentially disruptive changes that could lead to future disputes in election outcomes.

“The last thing we want in SA is to have election results disputed, such as we are currently seeing in the US. There are grave concerns over electronic voting methods”.

While all voting methods have potential for fraud and error, the comments on the DearSA platform around this campaign suggest the existing paper ballot method is the most reliable method we have, since it leaves a paper trail and auditing the results is therefore easier.

“This is a great victory for participative democracy in SA, and we want to thank the thousands of people who took the time to understand and comment on the proposed changes to the law.”