{"id":463518,"date":"2021-01-26T16:33:27","date_gmt":"2021-01-26T14:33:27","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=463518"},"modified":"2021-01-26T16:33:27","modified_gmt":"2021-01-26T14:33:27","slug":"bitcoin-under-scrutiny-as-south-africas-largest-alleged-ponzi-scheme-is-probed","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/463518\/bitcoin-under-scrutiny-as-south-africas-largest-alleged-ponzi-scheme-is-probed\/","title":{"rendered":"Bitcoin under scrutiny as South Africa’s largest alleged ponzi scheme is probed"},"content":{"rendered":"

South Africa\u2019s finance-industry regulator wants more power to prosecute perpetrators of fraud and oversee dealing in cryptocurrencies after the collapse of a Bitcoin trader, alleged to be the country\u2019s largest Ponzi\u00a0scheme<\/span>.<\/p>\n

The Financial Sector Conduct Authority is making proposals to regulate trading in cryptocurrencies such as Ethereum, XRP and Litecoin, the watchdog\u2019s head of enforcement, Brandon Topham, said by phone.<\/p>\n

The FSCA has handed details of its probe into the failure of Mirror Trading International Ltd. to a top police unit after uncovering alleged fraud.<\/p>\n

\u201cAt the point something becomes a Ponzi\u00a0scheme<\/span>, we have lost our jurisdiction,\u201d he said. \u201cWe need the police and the prosecuting authority to work fast and put people in jail.\u201d<\/p>\n

MTI – which in November claimed it had 260,000 members and 23,000 Bitcoin now worth about $740 million – was placed in provisional liquidation last month after clients battled to withdraw funds.<\/p>\n

On 22 December, the firm\u2019s management said in a letter posted on Telegram that they were misled and that the company\u2019s Chief Executive Officer Johann Steynberg may have fled to Brazil.<\/p>\n

Four temporary overseers must now begin tracing MTI\u2019s investors to recover the firm\u2019s assets, including money allegedly paid to some early players that runs into millions of rands.<\/p>\n

The FSCA investigation found that the company kept neither accounting records nor a comprehensive register of participants, apart from 170,000 unique email addresses found during an October raid.<\/p>\n

The FSCA investigations hadn\u2019t concluded MTI to be a Ponzi\u00a0scheme<\/span>\u00a0and the regulator only\u00a0noted<\/span>\u00a0it was trading without a license, Clynton and Cheri Marks, who joined the firm in August as head of the referral program and head of communications respectively, said in an email sent by their lawyer, Henry Selzer.<\/p>\n

\u2018Live Trades\u2019<\/strong><\/p>\n

\u201cMTI set out to see what requirements are necessary to obtain a license,\u201d they said. \u201cWhen it became apparent that such a license would be impossible to obtain, Johann Steynberg moved MTI to crypto-trading for which apparently no license was required.<\/p>\n

The live trades were demonstrated to the FSCA during 2020 and MTI cooperated with every request from the FSCA.<\/p>\n

A quadrupling in the price of the world\u2019s best-known digital token toward the end of last year has been accompanied by convictions abroad in scams tied to digital platforms and speculation that authorities globally will seek tighter controls.<\/p>\n

While the Marks have had no contact with Steynberg, or knowledge of his whereabouts since the matter came to light, they are sure he \u201cwill repay to members their Bitcoin investments as that is the character of the Johann Steynberg they came to know,\u201d their lawyer said.<\/p>\n

The couple denied any negligence. Regulators and liquidators were unable to supply contact details for Steynberg.<\/p>\n

MTI\u2019s membership base stretched across the globe. The Texas State Securities Board in July issued a cease-and-desist order against it.<\/p>\n

At present, the FSCA hasn\u2019t received formal requests to assist law-enforcement agencies abroad but is expecting queries, Topham said.<\/p>\n

\u2018Get in Quick\u2019<\/strong><\/p>\n

\u201cIt\u2019s going to take a serious investigation to ascertain how much was involved,\u201d Topham said. The FSCA is also looking into what transpired at two other firms believed to have a relationship with MTI, he said.<\/p>\n

Investors are drawn into potential scams because of South Africa\u2019s persistently sluggish economic growth and greed, Topham said. The testimonials of sport-stars or other prominent figures are also a lure.<\/p>\n

Another alleged South African Ponzi\u00a0scheme<\/span> in 2009 snared about 800 investors across eight countries, including Qatar\u2019s Barwa Real Estate Co.<\/p>\n

Barry Tannenbaum, who was accused of running the alleged R12.5 billion ($820 million) scam, moved to Australia and at the time said that some of the allegations against him are \u201cdrivel.\u201d<\/p>\n

\u201cI have been on radio shows where people say, \u2018I am a professional Ponzi investor. You get in quick and get out and like with any business you have to risk money to make money\u2019,\u201d Topham said.<\/p>\n

\u201cWe need to make an example of MTI so that people understand that investing in a Ponzi is never a good idea.\u201d<\/p>\n

\n

Read: Here\u2019s what an \u2018anti-Covid\u2019 ATM setup looks like<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa\u2019s finance-industry regulator wants more power to prosecute perpetrators of fraud and oversee dealing in cryptocurrencies after the collapse of a Bitcoin trader, alleged to be the country\u2019s largest Ponzi\u00a0scheme.<\/p>\n","protected":false},"author":59,"featured_media":194070,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[26],"class_list":["post-463518","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/463518","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=463518"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/463518\/revisions"}],"predecessor-version":[{"id":463528,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/463518\/revisions\/463528"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/194070"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=463518"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=463518"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=463518"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}