Major trading scheme under investigation in South Africa
The Financial Sector Conduct Authority (FSCA) says it is investigating the activities of Mirror Trading International (MTI) and has advised that clients of the scheme withdraw funds as quickly as possible.
MTI describes itself as a South African company offering forex trading services by using an automated system to trade with the funding pool on behalf of its members.
The group says that no trading knowledge is required and that clients are able to develop a ‘truly passive income’.
MTI told the FSCA that it accepts clients’ funds in the form of Bitcoin, it then pools the funds into one trading account on a forex derivative trading platform, and conducts high-frequency trading using a bot.
The regulator said that MTI requires a financial service provider licence to perform these trades, which it does not currently have. However, the FSCA said it is more concerned about the activities of the company.
“MTI claims to have more than R2.9 billion in clients’ funds in trading accounts, but we have not been able to conclusively confirm that the funds exist. Moreover, the returns on the investments claimed by MTI seem far-fetched and unrealistic,” the regulator said.
“According to MTI its bot trading is able to generate consistent profits of an average of 10% per month. The FSCA warns the public that MTI is not licensed to conduct the proclaimed business that they are conducting and that they are aware of the need for a FSP licence.”
The FSCA said that FX Choice, the previous platform broker for MTI appears to have made public statements that contradict MTI’s version in terms of trading volumes and bot trading.
FX Choice has also blocked the account of MTI due to compliance concerns.
“The investigation is ongoing, and MTI has partially co-operated with the FSCA. We are reviewing the information as it becomes available and will involve the South African Police Service if the discrepancies are confirmed.”
MTI has undertaken to inform all of its clients of the investigation and to provide the opportunity to all its clients to withdraw their assets.
“We recommend that clients request refunds into their own accounts as soon as possible,” the FSCA said.
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