A scintillating week for the Anglo stable

Written by Ciaran Ryan. Posted in Uncategorized

Records were smashed across the board, as rising commodity prices translated into dividend pay-backs. From Moneyweb.

Image: Anglo American, Flickr
Image: Anglo American, Flickr

What a great week for the Anglo stable of companies, with Anglo American, Anglo American Platinum (Amplats) and Kumba Iron Ore all announcing their 2021 half-year results.

Records were smashed left and right. Kumba more than doubled Ebitda (earnings before interest, tax, depreciation and amortisation) to R44.4 billion (H1 2020: R17.4 billion) on the back of a 12% increase in production to 20.4 million tons (Mt). Higher sales volumes and improved product quality mix contributed to the improved performance. Average realised export prices were nearly a third higher than the benchmark and more than double that achieved in the prior half year.

Kumba’s share price ended last week nearly 10% higher at R770, and is now up 220% from the low reached after the introduction of Covid lockdowns in March 2020. Shareholders were handsomely rewarded with a 271% bump in dividends to R72.70 per share (H1 2020: R19.80 per share).

When you’re making money at this rate, you start looking at ways to de-bottleneck production, and in Kumba’s case, that’s the logistics of shipping iron ore by rail from Sishen to the port of Saldanha. Kumba CEO Themba Mkhwanazi this week pointed to some progress in refurbishing tracks, while working with state-owned rail company Transnet to speed up delivery times.

On the safety front, Kumba is now five years without a work-related fatality.

Anglo American likewise benefitted from surging commodity prices, from platinum group metals (PGMs) to copper and iron ore. The group exited its South African coal businesses in the first half of the year, when these were hived off into Thungela Resources. It also announced an agreement to sell its interests in Cerrejón in Colombia, Latin America’s largest coal mine, as it transitions away from coal altogether.

The group’s Ebitda margin improved 61% over the half year compared with the same period in 2020. Free cash flow of $5.4 billion was used to pay down debt, with $2 billion being returned to shareholders by way of a special dividend and a share buy-back.

CEO Mark Cutifani this week told analysts that the group’s focus over the next three years is to drive “mining-enhancing volume” by 20%.

Copper production from Peru’s Quellaveco mine, one of the world’s largest reserves of copper, kicks in from 2022. “Our business is increasingly geared towards providing the future-enabling metals and minerals for a low-carbon economy and to meet global consumer demand trends. Combined with our commitment to carbon neutrality across our operations by 2040, we are working to meet the expectations of our full breadth of stakeholders,” said Cutifani.

Revenue shot up 114% to $21.8 billion at the halfway stage to June 2021, Ebitda climbed 262% to $12.1 billion, but it’s shareholders who stand to benefit most with a 1 082% increase in dividend and share buybacks, equivalent to $3.31 (2020: $0.28).

Amplats’ high

Anglo Platinum (Amplats) achieved a 47% increase to $2 884 per PGM ounce for the half-year, helped by rhodium and palladium setting new all-time highs of $30 000 and $3 000 per ounce, respectively, while platinum hit a six-year high above $1 300 per ounce.

Amplats recovered well from the February 2020 shutdown of the Anglo Converter Plant to record a 128% increase to 2.3 million PGM ounces of refined production. It will take another two years to clear the inventory accumulated as a result of the plant stoppage.

Rising commodity prices have been kind to Anglo American and Amplats, but there are signs that costs are rising at above inflation levels. In Anglo American’s case, rising costs hit Ebitda by $200 million, while Amplats reported a 9% increase in unit costs per ounce.

Higher commodity prices can provide cover for cost increases like this, but at some point the costs, unless contained, will start to shine through. But for now, it’s celebration time in the Anglo stable.

Tyranny: Big Tech and how it addicted us to the internet

Written by Ciaran Ryan. Posted in Uncategorized

A new book says Big Tech robs citizens of personal privacy with relentless surveillance and behavioural manipulation. From Moneyweb.

Microsoft, Apple, Amazon and Google holding company Alphabet and Facebook account for a combined market capitalisation of $5.3 trillion (close to R75 trillion).

US Senator Josh Hawley has been banging on this monopolistic drum for years, and recently compiled the case against Big Tech into a new book, The Tyranny of Big Tech.

As if to underscore the problem he identified in the book, the original publisher Simon & Schuster cancelled its publication, citing Hawley’s apparent support of protestors storming the US Capitol in January in support of former US President Donald Trump.

Hawley, a divisive figure in US politics, promptly found another publisher.

The new oligarchs

The American Constitutional framers were suspicious of corporations, given their propensity to morph into monopolies. Theodore Roosevelt, US president from 1901 to 1909, was known as the trust-busting president, but the task was beyond him.

The corporate barons reordered US economic life around the giant corporation, imposing divisions between management and labour, and elevating the professional class to a new type of aristocrat at odds with everyday workers.

How massive is Big Tech’s power?

Nine out of 10 internet searches are done by Google Search, and its browser Chrome holds 68% of the world desktop market. Chrome has 63% of the market for mobile browsing and Google’s Android has 85% of the smartphone market worldwide, while Google Maps has 67% of the smartphone map market in the world.

Amazon controls 40% of all online sales in the US, and more than a third of the US population subscribe to Amazon Prime services. Facebook has 2.8 billion active users, approaching half the world’s population.

With big power…

That’s a lot of power. And what has Big Tech done with this power? They reduced Americans to supplicants in their own country, suggests Hawley.

“Tech robs citizens of personal privacy with relentless surveillance and behavioural manipulation.”

The goal is to keep everyone online as long as possible, drown them with advertisements and influence the way they see the world and, more importantly, how they spend their money. There is some overlap between The Tyranny of Big Tech and The Age of Surveillance Capital by Shoshana Zuboff, as both excite outrage at where this Big Tech behemoth is taking us as a society.

Not admitting wrongdoing

The US Federal Trade Commission began investigating Facebook in 2011 over allegations that it took and then broadcast personal information customers had designated as private, while telling its customers just the opposite.

Facebook agreed to pay a hefty fine on this, only to find itself back in the firing line eight years later for violating the settlement terms – while continuing to hoover up customers’ personal, private data. This time it paid $5 billion for its misdeeds while formally refusing to admit any wrongdoing.

Facebook has inserted itself into the publishing arena without any of the legal liabilities, thanks to a clause (Section 230) in the Communications Decency Act which exempt Big Tech from liability for the posts of their readers, and allows them to moderate content without being considered publishers.

The tech oligarchs of today have become a toxic and divisive force in our economic bloodstream, shaping elections and influencing cultural leanings and preferences. Hawley cites numerous studies to buttress this claim.

Not what was promised 

When Facebook was listed in 2012, it was billed as the IPO of the decade, its mission being to create a world more open and connected than ever in history.

What happened, says Hawley, was something quite different. Facebook and its Big Tech peers ushered in the age of addiction.

“Big Tech needed as many Americans online for as long as possible, all in order to extract their personal data and manipulate them into buying the wares of Big Tech’s advertisers.”

This was the business model of Facebook and Google, dressed up as a form of personal liberation and self-growth.

Bitter cookies

It was Hal Varian, an otherwise obscure economist at the University of California, who first seems to have tripped up on the gold mine staring Facebook and Google in the face: the ability to mass mine and analyse data.

A customer signs up for a Google account and Google surreptitiously slips a “cookie” – essentially a miniature tracking device – onto your computer, and thereafter tracks your every online move. Google lacked a way to make money from its search engine until Hal Varian showed up.

Having previously railed against excessive advertising on search engines, Google’s founders revisited their scruples and decided online advertising was the way of the future after all.

But nothing compares to the trove of information Facebook possesses on its users. In 2012, the company conducted a massive behavioural psychology experiment on 700 000 unwitting users to see if it could change how users were feeling.

It did this by tweaking the frequency with which users were hit with pleasant or unpleasant content. As one scholar noted: “We wanted to see if we could make you feel bad without you noticing. We succeeded.” This was the point at which the real power of Facebook’s Big Data became apparent.

Not for the better

Big Tech has changed human behaviour, and not always for the better. A 2014 study of phone users in the UK found owners checking their phones 221 times a day. This not only blunts users’ natural problem-solving capabilities, it also changes their offline behaviour.

Cases of child depression spiked, as did youth suicide, sometimes for as little as being “unfriended” on Facebook.

What’s to be done about Big Tech which has forced its users into “an ecosystem of addiction, exhibitionism and fear of missing out?”

Time to be spit-up

On the regulatory front, treat them as public utilities, break them up, and scatter them to the winds. Google should be forced to give up YouTube, Facebook should be forced to sell Instagram and WhatsApp, says Hawley.

Then remove their exemption from legal liability for censoring and harming content creators. Let them face the financial penalties of their actions as the lawsuits pile up.

Perhaps more important than all this is reclaiming the social square and re-engaging with family and friends outside of the tablet and the smartphone.

The anti-trust movement is already on the march against Big Tech in Australia, Poland and India. More will surely follow. In the meantime, there’s alternatives to Twitter (Gab), the Chrome browser (such as Brave, which is faster and does not track your online movements), and to Facebook (such as Clouthub).

Why smaller cryptos are crushing bitcoin

Written by Ciaran Ryan. Posted in Uncategorized

A battle for the future of the world’s financial system is raging – and Ethereum, Cardano and Polkadot are in the ring. From Moneyweb.

The jury is still out, but Cardano could dislodge Ethereum as the platform of the new global financial system. Image: Akos Stiller, Bloomberg
The jury is still out, but Cardano could dislodge Ethereum as the platform of the new global financial system. Image: Akos Stiller, Bloomberg

Bitcoin hogged the headlines in the last week with its sprint past R700 000 on news that electric car company Tesla had invested $1.5 billion in the crypto, but a potentially more interesting story is playing out among three of the smaller cryptocurrencies – Ethereum, Cardano and Polkadot.

There is a battle playing out among the three over who gets to control what many perceive as the future global financial system – something known as ‘decentralised finance’ or DeFi.

Types of financial systems

A brief explainer here: the existing financial system is built around centralised control, such as banks, stock exchanges and insurers. These require intermediaries and brokers who add friction and costs to the system. These intermediaries squat in the middle of transactions for which they siphon off fees. And they’re often not quite as independent as they claim, so they end up selling you something you may not really need or want.

There are crypto exchanges where you can purchase cryptocurrencies (as well as digital silver, digital gold, stablecoins backed 1:1 with the rand, the US dollar and other currencies). These also have owners, and therefore fall under the heading of ‘centralised finance’.

Then there are the decentralised finance (DeFi) exchanges that have popped up in the last few years. They allow you to buy and sell cryptos without an intermediary, and often at better prices than on centralised exchanges.

You can also borrow, lend and earn interest – all without a go-between. Sending and receiving funds through DeFi is generally faster than in the traditional world of finance, and a loan can be taken out in minutes with no paperwork whatsoever.

With DeFi, the lender doesn’t even know your name.

To borrow on one of these exchanges, all you have to do is provide collateral in some recognisable form, such as bitcoin. Pretty soon, you’ll be able to ‘tokenise’ or convert highly illiquid assets such as property into digital assets and use that as collateral. And you’ll be able to own a fractional share of a highly desirable property, or a tiny piece of Apple equity. These are called ‘tokens’ rather than shares, and you will be able to buy and sell them on these DeFi platforms.

An option for the poor

The poor will also have easy access to this financial system.

Traditional financial providers and governments have promised to extend financial services to the poor, but the results are so far have been underwhelming. DeFi should be able to do that with greater efficiency and much lower costs.

For example, it has been estimated that the fees for cross-border remittances cost developing countries about 5% of GDP.

Crypto-based providers like Paxful have been able to slash those fees to 1% and less.

A new financial architecture

Competing to own this new DeFi space are software projects like Ethereum, Cardano and Polkadot. These are not ‘stores of value’ like bitcoin, but are platforms offering a new way of transacting without intermediaries. Each of these has its own cryptocurrency, so you can invest in them.

They are open-sourced projects, meaning any developer has access to the code, and they will eventually be interoperable with other financial ‘rails’ such as Visa and Mastercard.

Vitalik Buterin is the founder of Ethereum, and he set out to build a system that would allow transactions to take place between people anywhere in the world, with no need for trust or due diligence, and to settle those transactions instantly without need for an intermediary.

The idea of the ‘smart contract’ was born, where transactions are recorded on a giant decentralised ledger reposited (stored) on thousands of computers around the world rather than on a single centralised server, as with a bank.

This ledger is known as the Ethereum blockchain (the Ethereum cryptocurrency is called ether, or ETH).

Ethereum is a brilliant concept but suffers from bottlenecks and inefficiencies. The fees for using the system rise and fall depending on congestion on the network. The scalability of Ethereum has been a problem for some time, and developers hope the recent adoption of the Ethereum 2.0 upgrade will solve that.

Ethereum’s constraints have created opportunity

Those problems with Ethereum have opened up opportunities for Cardano and Polkadot, which do not suffer the same scalability issues.

Charles Hoskinson worked with Ethereum but left in 2014 and founded Cardano in 2015. He set out to build a system that improved on issues of speed and scalability faced by other cryptocurrencies.

In December last year a new phase of the project was launched allowing for the integration of smart contracts, with the addition of a multi-currency ledger being added to the blockchain.

This is of particular interest to corporations operating around the world.

Cardano (which goes by the code ADA) has been called the ‘Ethereum killer’ because of its ability to solve common business problems and scale without the kind of congestion problems facing Ethereum.

The jury is still out as to whether Cardano will dislodge Ethereum as the platform of the new global financial system.

Cardano in rands

Source: TradingView

Cardano has run from R2 to R13 in the last two months. You can earn interest of about 5% a year on your Cardano by ‘staking’ it (staking means putting your crypto to work in the blockchain and getting rewarded for it).

Ethereum in rands

Source: TradingView

Polkadot (DOT) was founded by Gavin Wood, who previously worked as a research scientist at Microsoft and co-founded Ethereum with Vitalik Buterin with the aim to make “one computer for the entire planet”.

Polkadot’s big advance over other blockchains, which operate in silos, was to create an internet of interoperable blockchains for a decentralised web. It aims to allow all blockchains to link and work together and offer smart contract functionality.

This is a huge benefit for developers as it allows them to develop apps that will work on all blockchains, not just one.

As Decrypt points out, the two issues blockchain-based systems most need to solve are scalability – the number of transactions per second the network can handle – and governance: how the community manages protocol upgrades and changes. Polkadot aims to solve both of these problems.

It was launched in May 2020, but has already risen to become the sixth largest cryptocurrency with a market cap of $26 billion – an extraordinary feat in a matter of just months.

Polkadot in USD

Source: CoinGecko

What the experts say

Richard da Sousa of AltCoinTrader says coins to watch in 2021 are ether, Cardano and Polkadot, for the reasons already given. “While bitcoin and Ethereum are breaking all-time highs in recent weeks, smaller coins such as Cardano have yet to do that.”

Jon Ovadia, CEO of crypto company Ovex, says two coins to look out for are FTT and SRM.

“Full disclosure: these are coins backed by one of our investors, FTX. Both of these coins are what are known as exchange coins and essentially give the holder rights to cashflows of the exchanges.

“The way this works is the exchange uses a portion of the fee income to buy back tokens from the open market on a regular basis. The most recent FTT burn was over $3 million. So I’d watch those coins very closely.”

Jason Carpenter of Etherbridge says Ethereum is definitely one to watch.

“Additionally investors could look at buying some of the blue chip DeFi infrastructure. Uniswap, Compound, Aave, Synthetix, Maker, Balancer. These networks are becoming core infrastructure of the Ethereum financial system.

“As these investments are incredibly volatile and in their infancy, caution must be paid to risks,” says Carpenter.

You can buy these on most decentralised exchanges, including Binance. Perhaps the best one-stop shop as a decentralised exchange is Uniswap, while Binance (which is a centralised exchange) offers access to most of these tokens.

“Investing in bitcoin, Ethereum and DeFi should be done so with small allocations and with a long term time horizon.”

Josh Miltz, co-founder of crypto company BitFund, says two coins on his radar are Polkadot and Filecoin.

“Polkadot is considered one of the most pioneering projects based on a multi-chain framework that can be a competitor. It aims at providing the most advanced peer-to-peer network for numerous blockchains. Over the past three months, Polkadot has gone from $3.70 a coin to $22.80 a coin, with a market capitalisation of over $20 billion.

“Filecoin is an open-source public cryptocurrency and digital payment system, is intended to be a blockchain-based cooperative digital storage and data retrieval method, and is another exciting cryptocurrency to look out for. The project was launched in August 2017 and raised over $200 million within 30 minutes.

“Filecoin aims to store data in a decentralised manner. Unlike cloud storage companies like Amazon Web Services or Cloudflare, which are prone to the problems of centralisation, Filecoin leverages its decentralised nature to protect the integrity of a data’s location, making it easily retrievable and hard to censor.”

FSCA issues warning on crypto assets

Written by Ciaran Ryan. Posted in Uncategorized

If something goes wrong, you’re unlikely to get your money back and you’ll have no recourse against anyone. From Moneyweb.

Image: Shutterstock
Image: Shutterstock

The Financial Sector Conduct Authority (FSCA) issued a “health warning” on crypto assets on Thursday, after receiving a large number complaints from South Africans who have lost their savings through crypto-related investments.

Crypto-related investments are not regulated by the FSCA, though draft proposals for regulation were issued last year which would bring cryptos under the Financial Advisory and Intermediary Services (Fais) Act.

Read: Crypto intermediaries must now be licensed FSPs

“As a result, if something goes wrong, you’re unlikely to get your money back and will have no recourse against anyone,” says the FSCA statement.

Crypto-assets – also called cryptocurrencies – are digital representations of value that are not issued by a central bank.

The FSCA warns of the following risks:

  • Crypto investment firms may be overstating the likely payouts, or understating the risks;
  • Investing in crypto assets, or investments and lending linked to them is high risk and those who participate should be prepared to lose all their money;
  • There’s no guarantee that crypto assets can be converted back to cash, which puts investors at the mercy of market supply and demand; and
  • The price of crypto assets is determined by market sentiment, making it extremely volatile. Multi-level marketing and Ponzi schemes are able to exploit fears of being left out, which draws in new investors, so further driving up the price of highly volatile assets.

Regardless of their risk appetites, the FSCA urges investors to allocate only a small percentage of their portfolios to cryptos.

Scam alert

It then issued the following scam alert:

  • The risk of losing all of the money invested in schemes promising high returns means that prospective investors should, before investing, obtain proper advice regarding the overall suitability of such a high-risk product in their investment portfolio and the impact on it should it fail.
  • Investors are urged to invest with open eyes as to the high risks involved, understanding that these types of investments are not appropriate for the vast majority of the South African population and that more appropriate and balanced investment products are available and offered by licensed financial service providers regulated by the FSCA.
  • Do not be pressured to go with the flow and do not be afraid of being left out of the ‘next big thing’.
  • There are no safe ‘quick rich’ schemes in the world. When it comes to your retirement, take a prudent and responsible approach and never put a large percentage of your wealth into any investment product. Diversification of risk is the most important principle for long-term wealth creation and preservation.

Read:
Finalmente Global placed in final liquidation as MTI dominoes start falling
MTI: Provisional liquidators appointed

The FSCA says it is working with the Intergovernmental Fintech Working Group (IFWG) to better understand and regulate “where appropriate”, crypto assets in SA.

It also advises retirement fund trustees to remain vigilant in their fiduciary duties before allowing investment managers to expose their fund assets to cryptos.

“The FSCA currently discourages such investments by retirement funds until regulation has been finalised to safeguard investors,” says the statement.

Crypto pioneer buys a R600k house with crypto and it ends up costing R200k

Written by Ciaran Ryan. Posted in Uncategorized

Using a smart contract, with no ID, email or customer information required. From Moneyweb.

AltCoin Trader founder Richard de Sousa purchased the property ‘completely outside of the banking system’. Image: Supplied

AltCoin Trader founder Richard de Sousa purchased the property ‘completely outside of the banking system’. Image: Supplied

Richard de Sousa founded crypto exchange AltCoin Trader in 2015 and has been a pioneer in bringing crypto to the broader South African market.

He lives, eats and breathes crypto. He decided to start exiting the traditional financial system several years ago – going off the grid, if you will, though says he still has several trusts and bank accounts.

He started buying bitcoin when it was $6 (around R91); today it is close to $20 000 (R303 805).

When bitcoin reached R10 000, he figured it was a good time to convert some of his gains to property.

He purchased a R4.3 million property for 420 bitcoin, which at today’s valuations is close to R128 million. He sold more than 90% of his bitcoin – something he regrets to this day.

“We all made mistakes when it came to crypto. When bitcoin hit R10 000 I thought I had done well out of it and I wasn’t sure where it would go next, so I decided to pour some of my profits into property. In retrospect it was a mistake, but I’m okay with it.”

A story to shake the banks

De Sousa has another story to tell that should have the banks very worried indeed.

He recently spotted another property for sale on the West Rand with an asking price of R650 000.

He jumped onto the Oasis.app website, which offers crypto-based financial services, including loans.

He decided to borrow the money for this house using his Ethereum crypto coins as collateral.

He then applied for a loan from Oasis, without having to go through the Know Your Customer (KYC) routine, nor did he have to provide an ID or an email address.

Here’s where it gets interesting: there are no monthly repayments.

In fact, you can choose to defer any payments for 20 years, or 40 years, if you so wish. When De Sousa took out the loan, the interest was 0%. Today it is 2%.

This is a mortgage lending model that could smash the banks’ hold on this market over the next few years.

He goes over the loan process in this Youtube video:

De Sousa’s loan was based on a smart contract, which is a type of contract linked to the blockchain, where certain conditions must be fulfilled before the collateral is called in. In this case, he had to provide roughly R1 million Ethereum as collateral to cover a loan valued at R650 000 to buy the property.

Should the Ethereum price drop below R650 000, the “smart contract” would automatically liquidate his Ethereum, deduct a 13% liquidation fee (or penalty) plus the loan amount, and refund him the balance.

Read: The future of money and payments

It took De Sousa less than 10 minutes to apply for the loan and place his collateral in the form of Ethereum coins into a vault at Oasis. He retained custody of the coins for the duration of the loan. Only the smart contract had the right to call on his collateral, and only under the conditions outlined earlier.

He wrote to the home seller’s attorneys and told them he would make full payment in cash into their trust account within seven days. “I gave myself seven days to do this, but in reality I only needed a couple of days.”

The loan for R650 000 was made in a crypto currency called Dai, which is backed 1:1 by the US dollar. He moved the Dai to the AltCoin Trader platform, sold it for rands (and made an extra 4-5% on this leg of the transaction because US dollar-linked cryptos typically sell for a higher price in SA due to local exchange controls, making it more expensive to acquire hard currencies).

With the Dai now converted into rands, Da Sousa transferred R650 000 to the house seller’s attorneys, and the deal was concluded.

The seller had no idea of the novel funding structure that took place in the background.

At this point, De Sousa was under no obligation to make monthly instalments on the loan.

He could ignore this for the next 20 years, or longer – the only risk he faced was that Ethereum’s price would drop below 66% of his collateral requirement, at which point his crypto would be liquidated under the terms of the smart contract.

One way to avoid your collateral being compromised in this way is to top it up with more Ethereum should there be a severe price drop.

Read: Six bitcoin will buy you a R1.4m house

De Sousa was under no obligations to make any monthly repayments on the loan, so he left it for several months. Seven months later, the Ethereum price had gone up three times, so he was now sitting with R3 million in collateral instead of the original R1 million.

At this point he decided to settle the loan in full. In effect, he paid about one third (or R200 000) of the house’s asking price by simply waiting for his Ethereum to increase in value. The house is now tenanted and earns a monthly income.

“I did all of this completely outside of the banking system, which is fraught with risks,” he says.

“You miss two payments under a mortgage contract and the banks have their lawyers all over you. This way I avoided the banks altogether, and that makes me extremely happy.”

It’s the ability to take out loans like this that should encourage mass adoption of cryptos. Smart contracts are backed by cryptos such as bitcoin and Ethereum. Rands and US dollars (unless in the form of Dai or any other so-called ‘stable coin’ backed by actual fiat currencies) won’t get you far in this world.

You have to exit the matrix and enter the crypto universe. Then all sorts of possibilities appear, says De Sousa.

Data dump ‘spills the beans’ on Mirror Trading International

Written by Ciaran Ryan. Posted in Uncategorized

Suggests MTI has taken in deposits of R4bn, while founders reportedly received R309m. From Moneyweb.

All bitcoin transactions are visible on the blockchain, so it is possible to trace where MTI-invested bitcoin came from and where it went. Image: Shutterstock
All bitcoin transactions are visible on the blockchain, so it is possible to trace where MTI-invested bitcoin came from and where it went. Image: Shutterstock

A group called Anonymous ZA dumped what it claims to be the entire transaction history of Mirror Trading International (MTI), which has been accused of being a Ponzi scheme – a claim denied by the company’s management.

MTI disputes the accuracy and completeness of the data dump. The Financial Services Conduct Authority (FSCA) says it is aware of the data leak and is looking into it. Last month the FSCA said it was investigating the activities of MTI for conducting unlicensed forex trading, and its claims of returns as high as 10% a month. The FSCA advised MTI members to ask for their money back.

Read: FSCA investigating Mirror Trading International

MTI’s argument

MTI’s head of marketing Cheri Marks confirms there was a security breach of the company’s administrative portal. “Yes, it was a criminal act. Yes, we will be pressing charges and everyone publishing the personal information illegally obtained we will refer to our legal counsel. The security breach has been fixed and the information leaked is inaccurate and incomplete at best.”

Marks says MTI is fully compliant with all relevant laws, and is the subject of unwarranted smears and rumour mongering over its referral marketing methods (where commissions of 10% are paid for introducing new members). These commissions are paid by MTI and are not deducted from members’ deposits.

“We have 170 000 members worldwide with roughly 17 000 bitcoin. There is nothing in law that prevents us from using referral marketing. No-one has ever asked for a withdrawal and not received it. We get people daily asking us for withdrawals and we honour all of them without fail.”

She adds that the FSCA has been given access to live trades to prove that profits are generated by trading rather than new bitcoins receipts, as has been claimed by some. “We don’t make promises about returns, and we explain the risks, which is what any responsible company should do.”

The company has an 18-month verifiable trading history with only one negative day of trading, she adds. Some have questioned whether this is possible, to which Marks replies: “The bot is an amazing development. Sure, it makes many losing trades and results vary, but only one day since we started has it ended in a loss.”

When MTI stopped trading forex, it shifted to crypto trading and “our members are happy and informed,” says Marks. “We chose to be in relatively unregulated markets like crypto for the very reason that we cannot suddenly be stopped from trading and have our accounts frozen. We are helping over 170 000 people grow their bitcoin portfolios at a time when governments have failed them, the banking system has failed them, employment is at an all-time low and businesses are failing by the minute.”

Warning signs

However, FSCA is sticking to its guns.

“Our advice had not changed since we issued our statement on MTI last month,” says Brandon Topham, head of investigations at the FSCA. “We recommend clients ask for their money back without delay. Our investigation into the company is ongoing.”

The fact that MTILeaks was able to grab the entire transaction history, apparently without hacking, points to “low budget” and shoddy website security, according to one source who asked not to be named.

“All data was acquired using simple enumeration and scraping techniques on the mymticlub.com site. No hacks were performed because the lack of basic security did not require it,” says a statement by MTILeaks.

“If your bank gave you access to any other customer’s data in such an insecure fashion, would you trust them to trade with your Bitcoin?”

But what’s inside the database may be of greater interest: it suggests the company has taken in deposits of more than R4 billion since inception and paid out R309 million to the founders. Total withdrawal requests by members reportedly total R2,9 billion, leaving “money in the bank” of R1.3 billion after withdrawn amounts and cancelled withdrawals are accounted for.

Members push on

Several MTI clients contacted Moneyweb when we previously reported on the company to reassure us they were receiving returns as promised.

Read: Get-rich-quick scheme pulls a crowd, despite regulators calling time-out

One MTI client says he was able to verify forex trades reported by the company as accurate. The company says it has stopped trading in forex in an effort to remain compliant with regulators and switched to trading bitcoin using computerised algorithms. That claim has also raised eyebrows in the crypto community.

Switching from trading one asset class to another virtually without pause – and apparently without a break in profits – has the skeptics is disbelief.

In a statement issued last month by Globalcrypto, MTI refuted allegations that MTI’s multi-level marketing systems is a Ponzi scheme, and that “members are able to add or withdraw their funds (bitcoin) at any time, with no complication or fees.” CEO Johann Steynberg added that MTI wants to change the reputation of the online passive income generating industry and ensure that the company is professionally managed and complies with all regulations.

Yet regulators in Texas and Canada recently sounded the alarm over MTI’s business practices. The company is accused of making misleading claims about its returns, while the Quebec Financial Market Authority listed MTI as a company that solicits investors illegally. MTI clients are rewarded with 10% commissions of new sign-ups.

Read: Joining MTI may end in tears

A separate analysis of MTI by South African blockchain researchers shows that by the first week of August 2020, a total of 15 351 bitcoin had been sent to various addresses controlled by MTI. That’s worth $170 million (R2.78 billion) at current bitcoin prices.

MTI only accepts deposits in bitcoin. Some local exchanges have reported a spike in demand for Bitcoin in recent months, at least some of which is destined for MTI. “We started to notice this some months back and began questioning people who appeared to be elderly and buying Bitcoin to participate in MTI. Though we didn’t have much information at the time, we advised caution,” says one crypto executive who asked not to be named.

All bitcoin transactions are visible on the blockchain, so it is possible to trace bitcoin destined for MTI and where it originated. The majority of these bitcoin are purchased on crypto exchanges such as Luno, VALR, Binance and Coinbase and then shipped to addresses controlled by MTI. Crypto exchanges have no control over the destination of bitcoin sent by customers, though some have started to question clients and advise them against it.

The data dump suggests that of the bitcoin received by MTI, a total of 3 755 appear to have been sent to online sports betting site Cloudbet.com and a further 845 to FXChoice, a Belize-based forex trading broker.

In June FXChoice said it blocked MTI’s trading account after investigating its high return claims and its use of multi-level marketing to attract new customers. “Before the account was blocked, [MTI] executed just a few trading operations, which were performed manually, large and incurred substantial losses,” says a statement from FX Choice, adding that it is still waiting for documents to confirm the source of funds.

Marks says the FXChoice statement is misleading. “We chose to move our funds to another broker who understands crypto before FXChoice made that statement. FXChoice is a forex regulated broker and it has frozen a few hundred bitcoin belonging to MTI shareholders – not member-owned bitcoin. We didn’t want to be at the mercy of a regulated broker that has to act on rumours generated in the press. We are in the process of supplying the financial information FXChoice requested.”

The MTILeaks database shows a payout of R1,45 billion to members, of which R360 million was in the form of bonuses for referring new members. Marks says this is also misleading since attributing a rand value to bitcoin withdrawals depends on the timing and the price of bitcoin, which is changing all the time.

“MTI has never and will never discourage members from withdrawing, we want them to see the fruits of our service to them. In August this year MTI effected 34 734 individual withdrawals to the value of 5933.85 bitcoin without any limitation. The fact that the biggest issue with MTI is our CEO’s willingness to share the bot’s functions with members is ridiculous to say the least.”

“The ‘shortfall’ in bitcoin claimed to be factual by Anonymous ZA is based upon the assumption that MTI is not trading, which is not the case. MTI remains focused on servicing its members and delivering on our brand promise, which we have done an exceptional job of to date,” Marks says.

In a statement issued to members last month, Steynberg writes: ”The time has come, to for once and for all, address and reframe the reputational perception issues of regulators, the media and potential members about this industry, through MTI demonstrating that a genuine bona fide business and brand using an innovative business model of integrity can exist and grow sustainably in this sector. I am personally very determined to see this through and together with and supported by MTI’s professional advisors, this process is now underway.”

MTILeaks is available here (you need the Tor browser to access it).

Is economic power shifting to the East?

Written by Ciaran Ryan. Posted in Uncategorized

Ciaran Ryan moderates a discussion between Michael Power, strategist for asset manager Ninety One, Jakkie Cilliers, founder of the Institute for Security Studies, and political commentator Moeletsi Mbeki. Michael Power says China will surpass the United States in economic size within the next few years – a trend accelerated by the coronavirus outbreak – and will in fact add 25% to its GDP in the next 3-4 years, while the US will remain relatively stagnant. Jakkie Cilliers says we should look out for the post-China story, which is India’s emergence as a global economic power. Moeletsi Mbeki agrees that China has grown phenomenally in the last 40 years, but asks: “So what?” Regions rise and fall in the economic terms, but we should be careful what lessons we learn from an authoritarian China that rides roughshod over its neighbours and trading partners.


Scientology volunteers using anti-germ warfare technology to decontaminate public spaces

Written by Ciaran Ryan. Posted in Uncategorized

Scientology volunteer decontaminating living spaces for at-risk people of Pretoria

Here’s a shout-out for the 200 Scientologists who are out from the break of dawn till sunset decontaminating public facilities across Gauteng province. I first posted the story here and the feedback was mind-blowing. It seems people are overdosing on apocalypse news and want something a little more cheering, so here’s an update.

While millions of South Africans are under lockdown due to the Covid-19 pandemic, teams of Scientology volunteer ministers are toiling away, decontaminating public spaces using an anti-germ warfare technology called Decon which was originally developed by the US military.

The millions under lockdown are fed a daily buffet of the most alarming news, and many are rightly fearful for their futures. The Scientologists decided they’d heard enough of this and applied for permission to be counted as essential service providers. “The one thing we can do right now is put our Decon technology at the service of the community,” says a spokesperson for the church. “Our aim is to help decontaminate areas of high traffic and unavoidable interactions, during lockdown.”

After decontaminating its own church facilities at Kyalami, Pretoria and Johannesburg, the Scientology volunteers spread out to neighbouring lodges, houses and public facilities.

Church spokesperson Theresa Hurter says the church’s international head office researched and located the most effective and non-toxic decontamination product available and settled on Decon 7. The product was developed in the 1990s by the US military to combat germ warfare and was later used to decontaminate food and food production lines in the US.

Since starting two weeks ago, the volunteers have decontaminated 111 buildings, and 78 essential services vehicles, creating sanitised environments for more than 15,000 at-risk people.

There hasn’t been a major disaster in the last two decades where the Scientologists didn’t respond, from 9/11 to the 2005 tsunami, the Fukushima disaster, and now this.

A nugget of good news in the midst of all the gloom.

Ciaran Ryan on SAFm: Court stops banks from taking money out of your account without permission

Written by Ciaran Ryan. Posted in Uncategorized

Ciaran Ryan talks to Nompu Siziba on SAFm about the court judgment handed down last week preventing banks from taking money out of your account in settlement of debts owed to it – a practice known as “set-off”. Billions of rands are potentially lifted from clients’ accounts each month due to the banks’ self-serving interpretation of the law.