Durban - THE Western Cape High Court has granted a provisional order for the liquidation of Mirror Trading International after investors claimed they had been unable to withdraw their funds from the controversial crypto currency scheme.
Empangeni investor Anton Lee and Pretoria investor Steven Watkins filed separate liquidation applications in the same court, with the former describing the firm as an insolvent “multi-level marketing business” and the latter as an “illegal pyramid scheme” in court papers.
Hawks spokesperson Colonel Katlego Mogale confirmed last week that the specialised unit was investigating a criminal case against the firm, which had attracted investors globally in SA, the UK, Australia, Namibia and Ireland.
Lee alleged in court papers that available information suggested MTI was “both commercially and factually insolvent,” operating “illegally” and therefore, should be liquidated in terms of section 344 of the Companies Act.
He said the Financial Services Conduct Authority had issued a statement that MTI was allegedly not registered with it and trading illegally and that MTI had issued a statement stating that its chief executive Johann Steynberg had left the country.
Lee said the firm had registered in 2019 as a crypto currency trader which traded in Bitcoin and used the modus operandi of inviting the public to register on its websites.
“These unsuspecting people were advised by the first respondent to move their Bitcoin from their Bitcoin wallets to the first respondent’s (MTI) Bitcoin wallets,” Lee said.
He said Steynberg was in control of MTI’s wallets from which Bitcoin was then transferred to its forex trading platform.
Lee said he initially invested R3000 in the scheme and was impressed with its returns and recommended it to most members of his extended family who also invested.
He said he and his family invested a total of $68 533,84 in Bitcoin which translated to R1 004 020,75.
Lee said that while he had initially been able to make withdrawals from the scheme, his recent attempts to redeem funds had been unsuccessful.
Watkins said in court papers that he had invested R150 000 with MTI which had been incorporated “for utilising it as a vehicle by means of which to conduct a so called crypto-currency or Bitcoin trading platform which, I respectfully submit, is in truth (and despite the respondent’s assurances to the contrary) nothing but an illegal investment or “pyramid” scheme.
Watkins said in court papers that the firm had indicated on its website that it had 90 000 members in 177 countries and that the numbers were “growing daily”. It said that more than 10 000 Bitcoin was traded daily.
“MTI offers reasonable daily profit from the trades. Trading and other bonuses are dependent on the daily trade results. The company does not rely on the growth in member numbers to remain sustainable as members receive trading bonuses from the daily trades and not from new members,” the site had read.
“It is respectfully submitted that the respondent deems it necessary to assure potential investors that it allegedly does not rely ‘on the growth in member numbers to remain sustainable, as this indicates that the respondent (and Mr Steynberg) are acutely aware that such a reliance (on growth in members’ numbers to remain sustainable) is a telling indication of an illegal investment or ‘pyramid scheme’,” he said.
However, he said this insurance “rings hollow” because elsewhere on the website, the firm explained its “optional referral programme for networkers” which qualified members for “referral, binary and leadership bonuses” for recruiting people into teams.
“The ‘binary bonus’ referral system is clear (sic) designed and intended to enable earlier investors in the respondent to be paid their ‘binary bonuses’ out of subsequent investments made by persons whom they have referred to the respondent,” Watkins said. He said existing members also received an additional 10% “of all deposits made by the specific individual’ referred to the scheme.
Judge Owen Rodgers this week granted the applicants an order for provisional liquidation of MTI. The matter was adjourned to March 1 2020.
The Mercury