SA: PONZI SCAM: US$236 million (R4 billion): The Biggest Financial Scam in S.African History: Anonymous data dump spills the beans on Mirror Trading International
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[This is run by a bunch of white Afrikaans guys. The main guy behind this was already involved in a ponzi scheme where he was cheating blacks. Now he's cheating whites on an unbelievable scale using Bitcoin … or so the claim is. I reckon it's just pure money fraud and nothing more. NOW HERE'S THE REALLY BAD NEWS: THIS IS NOT ILLEGAL IN SOUTH AFRICA. THESE WHITES CANNOT GO TO JAIL FOR THIS – AS FAR AS I UNDERSTAND IT. Jan]
The data dump suggests MTI has taken in deposits of R4bn, while founders reportedly received R309 million.
A group called Anonymous ZA dumped what it claims to be the entire transaction history of Mirror Trading International (MTI), which has been accused of being a Ponzi scheme – a claim denied by the company’s management.
MTI disputes the accuracy and completeness of the data dump. The Financial Services Conduct Authority (FSCA) says it is aware of the data leak and is looking into it. Last month the FSCA said it was investigating the activities of MTI for conducting unlicensed forex trading, and its claims of returns as high as 10% a month. The FSCA advised MTI members to ask for their money back.
MTI’s argument
MTI’s head of marketing Cheri Marks confirms there was a security breach of the company’s administrative portal. “Yes, it was a criminal act. Yes, we will be pressing charges and everyone publishing the personal information illegally obtained we will refer to our legal counsel. The security breach has been fixed and the information leaked is inaccurate and incomplete at best.”
Marks says MTI is fully compliant with all relevant laws, and is the subject of unwarranted smears and rumour mongering over its referral marketing methods (where commissions of 10% are paid for introducing new members). These commissions are paid by MTI and are not deducted from members’ deposits.
“We have 170 000 members worldwide with roughly 17 000 bitcoin. There is nothing in law that prevents us from using referral marketing. No-one has ever asked for a withdrawal and not received it. We get people daily asking us for withdrawals and we honour all of them without fail.”
She adds that the FSCA has been given access to live trades to prove that profits are generated by trading rather than new bitcoins receipts, as has been claimed by some. “We don’t make promises about returns, and we explain the risks, which is what any responsible company should do.”
The company has an 18-month verifiable trading history with only one negative day of trading, she adds. Some have questioned whether this is possible, to which Marks replies: “The bot is an amazing development. Sure, it makes many losing trades and results vary, but only one day since we started has it ended in a loss.”
When MTI stopped trading forex, it shifted to crypto trading and “our members are happy and informed,” says Marks. “We chose to be in relatively unregulated markets like crypto for the very reason that we cannot suddenly be stopped from trading and have our accounts frozen. We are helping over 170 000 people grow their bitcoin portfolios at a time when governments have failed them, the banking system has failed them, employment is at an all-time low and businesses are failing by the minute.”
Warning signs
However, FSCA is sticking to its guns.
“Our advice had not changed since we issued our statement on MTI last month,” says Brandon Topham, head of investigations at the FSCA. “We recommend clients ask for their money back without delay. Our investigation into the company is ongoing.”
The fact that MTILeaks was able to grab the entire transaction history, apparently without hacking, points to “low budget” and shoddy website security, according to one source who asked not to be named.
“All data was acquired using simple enumeration and scraping techniques on the mymticlub.com site. No hacks were performed because the lack of basic security did not require it,” says a statement by MTILeaks.
“If your bank gave you access to any other customer’s data in such an insecure fashion, would you trust them to trade with your Bitcoin?”
But what’s inside the database may be of greater interest: it suggests the company has taken in deposits of more than R4 billion since inception and paid out R309 million to the founders. Total withdrawal requests by members reportedly total R2,9 billion, leaving “money in the bank” of R1.3 billion after withdrawn amounts and cancelled withdrawals are accounted for.
Members push on
Several MTI clients contacted Moneyweb when we previously reported on the company to reassure us they were receiving returns as promised.
Read: Get-rich-quick scheme pulls a crowd, despite regulators calling time-out
One MTI client says he was able to verify forex trades reported by the company as accurate. The company says it has stopped trading in forex in an effort to remain compliant with regulators and switched to trading bitcoin using computerised algorithms. That claim has also raised eyebrows in the crypto community.
Switching from trading one asset class to another virtually without pause – and apparently without a break in profits – has the skeptics is disbelief.
In a statement issued last month by Globalcrypto, MTI refuted allegations that MTI’s multi-level marketing systems is a Ponzi scheme, and that “members are able to add or withdraw their funds (bitcoin) at any time, with no complication or fees.” CEO Johann Steynberg added that MTI wants to change the reputation of the online passive income generating industry and ensure that the company is professionally managed and complies with all regulations.
Yet regulators in Texas and Canada recently sounded the alarm over MTI’s business practices. The company is accused of making misleading claims about its returns, while the Quebec Financial Market Authority listed MTI as a company that solicits investors illegally. MTI clients are rewarded with 10% commissions of new sign-ups.
A separate analysis of MTI by South African blockchain researchers shows that by the first week of August 2020, a total of 15 351 bitcoin had been sent to various addresses controlled by MTI. That’s worth $170 million (R2.78 billion) at current bitcoin prices.
MTI only accepts deposits in bitcoin. Some local exchanges have reported a spike in demand for Bitcoin in recent months, at least some of which is destined for MTI. “We started to notice this some months back and began questioning people who appeared to be elderly and buying Bitcoin to participate in MTI. Though we didn’t have much information at the time, we advised caution,” says one crypto executive who asked not to be named.
All bitcoin transactions are visible on the blockchain, so it is possible to trace bitcoin destined for MTI and where it originated. The majority of these bitcoin are purchased on crypto exchanges such as Luno, VALR, Binance and Coinbase and then shipped to addresses controlled by MTI. Crypto exchanges have no control over the destination of bitcoin sent by customers, though some have started to question clients and advise them against it.
The data dump suggests that of the bitcoin received by MTI, a total of 3 755 appear to have been sent to online sports betting site Cloudbet.com and a further 845 to FXChoice, a Belize-based forex trading broker.
In June FXChoice said it blocked MTI’s trading account after investigating its high return claims and its use of multi-level marketing to attract new customers. “Before the account was blocked, [MTI] executed just a few trading operations, which were performed manually, large and incurred substantial losses,” says a statement from FX Choice, adding that it is still waiting for documents to confirm the source of funds.
Marks says the FXChoice statement is misleading. “We chose to move our funds to another broker who understands crypto before FXChoice made that statement. FXChoice is a forex regulated broker and it has frozen a few hundred bitcoin belonging to MTI shareholders – not member-owned bitcoin. We didn’t want to be at the mercy of a regulated broker that has to act on rumours generated in the press. We are in the process of supplying the financial information FXChoice requested.”
The MTILeaks database shows a payout of R1,45 billion to members, of which R360 million was in the form of bonuses for referring new members. Marks says this is also misleading since attributing a rand value to bitcoin withdrawals depends on the timing and the price of bitcoin, which is changing all the time.
“MTI has never and will never discourage members from withdrawing, we want them to see the fruits of our service to them. In August this year MTI effected 34 734 individual withdrawals to the value of 5933.85 bitcoin without any limitation. The fact that the biggest issue with MTI is our CEO’s willingness to share the bot’s functions with members is ridiculous to say the least.”
“The ‘shortfall’ in bitcoin claimed to be factual by Anonymous ZA is based upon the assumption that MTI is not trading, which is not the case. MTI remains focused on servicing its members and delivering on our brand promise, which we have done an exceptional job of to date,” Marks says.
In a statement issued to members last month, Steynberg writes: ”The time has come, to for once and for all, address and reframe the reputational perception issues of regulators, the media and potential members about this industry, through MTI demonstrating that a genuine bona fide business and brand using an innovative business model of integrity can exist and grow sustainably in this sector. I am personally very determined to see this through and together with and supported by MTI’s professional advisors, this process is now underway.”
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