If Mirror Trading International is declared unlawful, all profits have to be returned

If Mirror Trading International (MTI) is declared unlawful, some investors will have to return all the profits they made and that is why some members are against this happening. The liquidators are applying for the scheme to be declared unlawful in the High Court on 2 March 2022.

Johann Steynberg started Mirror Trading International in April 2019 as an automated Bitcoin trading platform and investors had to deposit a prescribed minimum amount of Bitcoin in MTI’s wallet which MTI said it would grow by between 0.5% and 1.5% per day using a ‘Trading Bot’.

Investors could earn even bigger returns if they referred other investors and thousands of people invested in MTI, but the scheme started to collapse when the FSCA started investigating it. The company was provisionally liquidated at the end of 2020 and finally liquidated on 30 June 2021.

Clynton Marks, who says he owns 50% of MTI, argues that the application to declare MTI an illegal scheme, as well as the liquidation order, is merely aimed at getting investors’ money into the hands of the state.

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Mirror Trading International second creditors’ meeting

At the second creditors’ meeting held recently, the Master of the High Court in the Western Cape said that the only valid claim so far was that from JNX Online, a company Steynberg started to buy and sell Bitcoin.

Lawyers representing Marks and various groups of investors then started presenting various allegations against the liquidators, although it was not the correct forum to deal with these issues. However, the liquidators made it clear that they will answer any queries from legitimate creditors as they are wary to communicate with groups of creditors with winners and losers in the same group.

Advocate Hendrik van Staden, who said at the creditors’ meeting that he represents 920 creditors who are claiming R229,802,289, tried to air some disputes, but the liquidators pointed out that he failed to answer three letters posing pertinent questions about who he represents and if he and his attorneys have mandates to do so.

Chris Kriel, who claims to represent 12,000 investors, but did not provide any proof according to the liquidators, complained that the liquidators had not responded with any details to tell creditors how they must go about proving their claims.

According to the liquidators, he also has in his possession sensitive privileged communication between the liquidators and their attorneys which he posted on his website. and placed on terms to remove such communications from his website. The liquidators demanded that he takes down this information.

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High Court will decide on claim format

Sybrand Tintinger, the liquidators’ attorney, explained to the Master that the liquidators took extensive advice on the format of creditors’ claims and were advised that it would be prudent for them to approach the High Court for directions. This application is currently being finalised.

The liquidators also pointed out in a circular to the creditors that the perception created that all other claims were rejected, was wrong, describing it as misinformation spread to discourage actual creditors to prove their claims.

Creditors who have already lodged their claims will not have to lodge their claims again, as the liquidators will work on the claims already lodged and if satisfied accept the claims according to the court order.

“If the liquidators require clarification on certain claims, creditors will be engaged to first supply it in order to attempt to settle the amount of the claim, whereafter the claim will be proved on the basis of the settlement.” If the liquidators cannot reach a settlement, investors are entitled to re-lodge claims.

ALSO READ: This is what the MTI liquidators have found so far

Sizeable dividend will be paid to creditors

The liquidators said in the circular that a sizeable dividend will be paid to creditors, although a claim of the South African Revenue Services (Sars) has not yet been received. “The liquidators do not reject claims, the Master presiding at the meeting of creditors does.”

Creditors at the meeting also had other questions for the liquidators, such as what happened to the 8,000 Bitcoin the liquidators found. The liquidators responded by saying that the reference to 8,000 Bitcoin was based on preliminary observations from the digital forensic experts, who identified viable wallets that received Bitcoin derived from MTI.

However, after extensive further investigations, the liquidators concluded that they do not have a legal basis to claim ownership or the value of the relevant Bitcoin. The liquidators also shot down claims that they have done nothing in the past year, saying they have worked literally daily and non-stop on the administration of the MTI estate.

“The liquidators are not insensitive to these issues and are trying to, as quickly as possible, ensure a first distribution to investors. Unfortunately, these attempts are delayed by the winners who oppose measures to expedite the liquidation process.”

ALSO READ: Victims of MTI Bitcoin scam anxiously waiting for Steynberg’s extradition

Witnesses not cooperating

The liquidators say they also experienced a great measure of non-cooperation from witnesses who were already called to insolvency enquiries, particularly the winners, who failed to prepare for the enquiries and rather approached the enquiries on the basis of seeing what the liquidators have before volunteering information.

Regarding Steynberg, the liquidators say his arrest is a very positive development and they had a very positive high-level meeting with the investigating and prosecuting authorities in Cape Town recently and have received assurances that international processes are ongoing.

They also emphasised that rumours that MTI is not insolvent is opportunistic rhetoric, used by the winners who want to avoid the consequences of recovery processes against them at all costs. The liquidators say that the difference between Bitcoin deposited and withdrawn, was at least 10,800 Bitcoin.

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Where did the Bitcoin go?

MTI, according to its own records, told investors it still had 18,700 Bitcoin in its wallets in October 2020 and 22,000 in December 2020, when it imploded. The liquidators have only been able to recover 1,282 Bitcoin to date due to FX Choice blocking the wallet.

“All other Bitcoin were either stolen or paid to investors who withdrew Bitcoin at an earlier stage. If MTI never traded with constant profit, how could it pay referral commissions and the various tier bonuses? The answer is simple – as long as it lied to the public, it took in coins from new investors to pay the ever-increasing liabilities from the false promises made to earlier investors.”

The liquidators also confirmed that the back office data they have is reliable and that is has never been hacked, but only scraped for information.