Criminal case opened. Liquidators will have to track down thousands of investors using nothing more than emails. From Moneyweb.
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.”
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.
Claim forms will be available on the website within the next few days.