Litigation: How crypto scam operated exposed

Court papers filed by the liquidators for failed crypto scam Mirror Trading International (MTI) lift the curtain on one of the most extraordinary investment rip-offs in SA’s history, according to a Moneyweb report. It was rated the world’s biggest crypto scam of 2020, having roped in $588m (R7.9bn) worth of bitcoin in 470 000 transactions, according to the 2021 Crypto Crime Report by Chainalysis. A data dump by Anonymous ZA puts the number of bitcoin under MTI control at 23 000, worth about R11.5bn at current prices. According to the liquidators, about 280 000 investors worldwide were involved. Bitcoin CEO Johann Steynberg disappeared in December 2020 after the company stopped paying out requests for withdrawals in a bitcoin investment scheme that promised returns of up to 10% a month.

The company was provisionally liquidated in December 2020. The argument will be heard next week in the Western Cape High Court as to whether MTI will be finally liquidated or whether, based on an affidavit filed by 50% shareholder in MTI Clynton Marks, the provisional liquidation order should be set aside on various grounds, including that the terms and conditions of the company make it clear that those investing in the scheme were members of a club, rather than creditors. Rather than subject MTI to liquidation, there are some within MTI who argue that it should be either placed in business rescue or allowed to reach a compromise with creditors under the Companies Act. The provisional liquidators argue that it is impossible to rescue a scheme that is unlawful, and they are asking the court to declare MTI a Ponzi scheme and to have it placed in final liquidation.