← Go back Apr 04, 2023
Almost two years after it was liquidated, two court rulings in quick succession, on two continents, have skewered collapsed bitcoin trading scheme Mirror Trading International (MTI) as a Ponzi scheme that owes its members tens of billions of rands. In the US, a judge in Texas has ordered that the group's founder and CEO Johann Steynberg pay $1.73 billion (roughly R32 billion) in restitution to defrauded victims and another $1.73 billion as a civil monetary penalty. In rands, the total penalty amounts to R64 billion. This is the highest civil monetary penalty ever ordered in a case involving the Commodity Futures Trading Commission which in July last year. Just two day after the US ruling, the Western Cape High Court ruled MTI was an "unlawful Ponzi scheme" that generated returns for early investors with investments taken from those who joined later. The US was handed down on 24 April and the South African ruling on 26 April. The Stellenbosch-headquartered bitcoin-trading scheme collapsed in December 2020 after it abruptly halted payments to members and its founder and CEO, Johann Steynberg, went missing. Steynberg was , where he is still awaiting an extradition hearing. In the US, Judge Lee Yeakel of the US District Court for the Western District of Texas ruled that Steynberg stole funds from MTI members by depositing and holding their investments in e-wallets that he controlled. "Steynberg, individually and as the agent of MTI, misappropriated participants' Bitcoin for his personal use." Yeakel ruled that MTI paid out returns to some members from deposits of other participants in the scheme. The CFTC, in a statement, warned that the restitution order may not result in the recovery of the stolen bitcoin as "wrongdoers may not have sufficient funds or assets". Just two days after Judge Yeakel's US ruling, the Western Cape High Court ruled in a separate case that MTI's underlying business model was "designed and implemented to perpetrate fraud on members of the public". The company's liquidators brought the application. "The remarkable results presented to investors were prima facia false," said acting Judge Alma de Wet. "I agree with the applicants that the fraud perpetrated by Steynberg and MTI were not isolated incidences but rather fundamental aspects of the structure of the businesses and as such tainted the business operations of MTI as a whole". De Wet ruled that all agreements concluded between MTI and its investors "in respect of the trading/management/investment of bitcoin" were unlawful. De Wet's ruling is a blow against Clynton Marks, a 50% shareholder and self-proclaimed director in MTI, who had asked the court to stay the winding-up process. Both rulings confirms earlier reporting from data analysis firm Chainalysis. Two years ago, it wrote that MTI was 2020's biggest global cryptocurrency investment scam and operated as a "money laundering and cash out mechanism".
Read more: fin24
