Only 10 000 MTI members may be eligible for payout

Liquidators for crypto Ponzi scheme Mirror Trading International (MTI) say roughly 10 000 members – out of the hundreds of thousands that signed up – could receive a dividend payout of 50c to 60c in the rand.

This is just a fraction of the more than 200 000 MTI member accounts listed on the company database.

Responding to Moneyweb questions, the liquidators say the total number of claims will likely be 10 000 or even less.

It is believed that most members did not submit claims to the liquidators for a variety of reasons, including that they did not want to be identified. There were also some fraudulent claims, as well as incomplete or duplicate claims. Liquidators say more claims may be expunged as further discoveries are made.

It is still unclear how many people actually participated in the scheme, as many were registered with MTI under the names of family members, domestic servants, even pets. This likely inflated the actual number of participants, as members could earn 10% commissions for referrals, which provided an incentive to make multiple deposits under different names.

MTI was rated by Chainalysis as the world’s largest crypto scam of 2020, roping in more than 29 400 bitcoin (currently worth about R15 billion) from hundreds of thousands of members around the world on the promise of generating 10% returns a month from forex trading.

The Cape High Court earlier this year declared it a Ponzi scheme, where requests for withdrawals were paid out of funds deposited into the scheme.

In August, the US Western District of Texas court ordered MTI to refund $1.73 billion (R32 billion) after defrauding more than 23 000 US residents through an “unregistered commodity pool”.

Nothing like this amount has been recovered by MTI liquidators, and the Texas court has agreed to stay any attempt to collect on this money while liquidation proceedings are underway.

Read: Johann Steynberg and MTI charged with defrauding 23,000 US investors

Members had to send bitcoin (BTC) to MTI where it was supposedly converted into other currencies for forex trading using a computerised bot, though no evidence of a successful trading bot could be found. The only evidence of trading was a limited number of bitcoin that ended up with a Belize-based broker, FX Choice, and most of the money traded on this account was lost.

The gall …

In July 2020, the Texas State Securities Board issued a cease and desist order against MTI and its CEO Johann Steynberg for operating a fraudulent multi-level marketing scheme that had defrauded US residents. This order was apparently ignored, and MTI continued to solicit deposits from Texas residents until it finally collapsed in December 2020.

Steynberg fled South Africa around the time the company was placed in liquidation and was arrested a year later in Brazil for using a false identity. He remains in custody in Brazil, while the US and South Africa are seeking to extradite him.

MTI Liquidators recovered about R1.1 billion of the bitcoin that had been frozen by the Belize broker FX Choice. The whereabouts of the rest of the bitcoin is uncertain, which is why authorities in the US and South Africa are eager to question Steynberg.

“Defendants [MTI and Steynberg] misappropriated, either directly or indirectly, all of the Bitcoin they accepted from pool participants,” says the Texas court ruling.

They also falsely represented to “actual and prospective pool participants that defendants operated a pooled forex account, using an experienced trader to produce consistent, high rates of return”.

Steynberg also claimed the trading bot had lost just one out of 200 days of trading, which was false.

In South Africa, Steynberg told the Financial Sector Conduct Authority (FSCA) that heavy trading losses between April and July 2019 resulted in the company deploying a computerised bot trading system, and members were encouraged to switch to a pooled account rather than the previous system of operating individual trading accounts. This was when an account was opened with FX Choice, and more heavy losses were made. Members were deceived by being shown false “demo” accounts, not the real trading account.

Read: An inside look at how MTI managed to prolong an extraordinary losing streak

At this point FX Choice placed a freeze on MTI’s account. Steynberg then supposedly transferred his operations to a new broker called Trade300, which appears to be a non-existent entity and alter ego for Steynberg.

MTI and the liquidators have agreed to cooperate with US regulators in any further actions and investigations related to the scam.