Bitcoin gone bad

Aftermath Of The $740Mn MTI Sham: South Africa Goes Tough On Crypto

By  |  January 27, 2021

It won’t be the first time crypto is getting bad PR but a certain recent disastrous event is giving crypto some major attention of the wrong kind in South Africa.

It’s been a few months since it came to light that South Africa may have suffered what many are calling the biggest Ponzi scheme in its history. It involved an unregistered and unlicensed SA-based bitcoin trading firm known as Mirror Trading International (MTI) Ltd.

To cut a long story short, MTI, which as of November 2020 claimed 260,000 members and 23,000 bitcoin (now worth about USD 740 Mn) under its management, is being hounded after it was found that the company’s CEO, one Johann Steynberg, and 17,000 bitcoin belonging to users are in the wind.

Until its demise, MTI marketed itself as a bitcoin trading platform offering members a 10-percent monthly return by implementing a specialized trading approach. The explosive upward price trajectory of the world’s most valuable crypto asset, bitcoin, brought many people on board. 

Since the platform went bust, South Africa’s finance-industry regulator, the  Financial Sector Conduct Authority (FSCA), has been investigating the platform and some of the findings are quite unsettling.

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And it appears the weight of some of the shocking discoveries have now caused the FSCA to seek more power to prosecute perpetrators of fraud and oversee dealing in cryptocurrencies.

In plain language, the FSCA wants permission to go tough on crypto platforms in the country after seeing the elaborate MTI sham unravel and go under, leaving over 200,000+ people around the globe stranded.

The FSCA is now making proposals to regulate trading in cryptocurrencies such as Ethereum, XRP, and Litecoin, the watchdog’s head of enforcement, reports Bloomberg.

“At the point something becomes a Ponzi scheme, we have lost our jurisdiction,” says the FSCA’s Head of Enforcement, Brandon Topham, who made the case for stricter and tighter controls of crypto platforms over a phone call.

“We need the police and the prosecuting authority to work fast and put people in jail.”

The sheer enormity and audacity of the recent MTI incident can be thought of as the biggest factor driving this new-found resolve by the FSCA to rein in crypto platforms.

The FSCA investigation found that MTI kept neither accounting records nor a comprehensive register of participants, besides 170,000 unique email addresses found during a raid that took place in October.

In any case, the FSCA has handed details of its investigation into the collapse of MTI to a top police unit after uncovering alleged fraud.

It’s been reported that four temporary overseers have been tasked with tracing MTI’s investors to recover the firm’s assets, including money allegedly paid to some early players, which possibly run into millions of rand.

Featured Image Courtesy: Sygna Bridge

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