The collapsed bitcoin Ponzi scheme has shrunk from R1.1bn in 2021 to R627m. From Moneyweb.
Investors in the collapsed bitcoin scheme Mirror Trading International (MTI) are facing a dwindling pool of assets.
A recent court filing by auditor Jan Dekker provides an update on what has happened to the roughly R1.1 billion in bitcoin that was recovered by liquidators and sold in SA in 2021.
The current value of the MTI estate is R627 million, which is nearly R450 million less than the R1.1 billion recovered by liquidators in 2021. Those funds were invested and earned interest, while further amounts were subsequently recovered by liquidators, which would have initially pushed up the value of the estate.
The report also highlights the reduced prospect of recovering any bitcoin supposedly hidden by MTI founder Johann Steynberg, who reportedly died of a heart attack in Brazil in April while awaiting extradition to SA to face fraud charges for his role in a Ponzi scheme that roped in 39 193 bitcoin, worth about R44 billion at today’s prices.
The auditor report says 32 285 bitcoin were paid out to investors before its collapse, leaving a shortfall of 6 908, worth about R7.7 billion. Tracking down this missing bitcoin has so far proved impossible.
The report was filed in response to a case brought by two MTI investors seeking to place the company into business rescue on the grounds that it was not insolvent and could continue trading by generating a return on MTI’s remaining bitcoin. The case was later withdrawn.
Dekker disputes the claim of solvency by highlighting liabilities to the South African Revenue Service (Sars) and the order for $1.73 billion (R33.3 billion) issued by the US Western District Court in Texas.
MTI investors have lodged claims of R1.62 billion as of April 2024. A further amount of R120.4 million in fees was paid to liquidators according to the June 2023 liquidation and distribution account – a figure that will have grown since then and which has raised eyebrows among many investors.
In 2023, liquidators agreed to a settlement of R283 million with Sars, which had previously claimed R931 million in back taxes and penalties. The liquidators initially rejected the claim, saying the company did not make a profit.
Liquidators have sent out thousands of summonses to investors in SA and around the world in the hope of recovering additional bitcoin withdrawn from the scheme prior to its collapse in December 2020.
Controversially, thousands of MTI investors – apparently oblivious that it was a Ponzi scheme – are being asked to pay back whatever bitcoin they withdrew, but at today’s prices. That means they would have to pay back up to four times the value withdrawn because of the spike in bitcoin prices since 2020.
Attorney John Lister is representing more than 1 000 MTI clients who have received letters of demand from the liquidators for the repayment of bitcoin to the estate.
One of these is Ben Janse van Vuuren, who invested R20 000 in MTI in July 2020 but withdrew his funds, then worth R21 000, a few months later when he suspected he might be involved in a scam. He has now been asked to repay the 0.13 bitcoin he withdrew at the updated price of R97 000.
Read: Liquidators claim R97 000 from MTI investor who thought he’d dodged a bullet
Says Lister: “The liquidators must explain what they are doing about paying people’s claims. Is all the money that’s sitting in that pot going to be used in litigation or are people who have lodged claims going to be paid?
“[The liquidation process] has been going on for three-and-a-half years. One must say the liquidators did a good job in reducing the amount payable to Sars. But do they really intend to argue thousands of cases in court? Is this about generating fees as opposed to creditors being paid?”
The liquidators say they are entitled under Sections 26 and 32 of the Insolvency Act to demand repayment of any withdrawals from MTI as it was declared an unlawful Ponzi scheme in the Western Cape High Court in 2023. That means that any agreements between the company and investors were void from the outset.
Read: Good news and bad news for MTI investors
Lister and several other attorneys argue that the Insolvency Act never anticipated an asset such as bitcoin, which is digital, intangible, and volatile. Many of those receiving summonses are relying on a 2023 judgment in the Cape High Court by Acting Judge Alan Maher, who issued a directive that any MTI member who withdrew less than they invested would have to account to the liquidators for any returns received, and any benefit received would reduce the size of their claim against MTI. The directive says the investment must be calculated in rands on the date of the investment and the date of the withdrawal – not the current price of bitcoin.