FSCA investigating Mirror Trading International
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CAPE TOWN - The Financial Services Conduct Authority (FSCA) is investigating the activities of automated forex trading company, Mirror Trading International (MTI).
“The current business model of MT requires it to be in possession of a financial service provider licence.” The FSCA said it also had other concerns. MIT claims on its website that all the investor has to do is “sit back and watch your Bitcoin grow”, even if the price of the Bitcoin drops.
The FSCA said it had been told by MTI they accept clients’ funds in the form of Bitcoin, pool the funds into one trading account on a forex derivate trading platform, and conduct high frequency trading through the utilisation of a Bot.
“”If this is being done as described, then this amounts to financial services, hence the licence requirement,” the FSCA said in a statement.
The FSCA said it was even more concerned about the activities of the company, which claimed to have more than R2.9 billion in clients’ funds in trading accounts, “but we have not been able to conclusively confirm the funds exist.”
Moreover, the returns on the investments claimed by MTI seemed far-fetched and unrealistic.
“”According to MTI its Bot-trading is able to generate consistent profits of an average of 10 percent 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 an FSP licence.”
The FSCA also drew attention to the fact that FX Choice, the previous platform broker for MTI, seemed to have made public statements that gainsay the version of MTI in terms of trading volumes and Bot trading.
FX Choice had blocked MTI's account of MTI due to compliance concerns. The FSCA was in the process of obtaining further information from FX Choice.
The investigation was ongoing, and MTI had 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 that are with MTI.”
We recommend that clients request refunds into their own accounts as soon as possible, the FSCA said.
In terms of the scheme advertised by MTI on its website, a member established a trading pool balance that fluctuates with the Bitcoin price, but the member’s Bitcoin would continue to grow, and when the price of Bitcoin increased, the member would be even better off.
According to its website, MTI also provides an escalating financial bonus scheme based on the rising number of new investors that a member brings to the company, which is a direct marketing scheme that often serves as a model for pyramid schemes.