The untold stories of Mirror Trading International, a now-defunct bitcoin trading scam that operated majorly in South Africa, open a can of issues and challenges surrounding crypto. Now, new details show just how much havoc there is in its wake.
Liquidators tasked to recover the funds and proceed with legal action against culprits, have found it cumbersome. Legal documents show $60 million recovered, nearly 40% of which goes to legal costs ($7.78 million) and taxation ($15.2 million). Victims are as a result left with a much smaller percentage of their capital.
One striking aspect of this case is its global reach. Launched in 2019, MTI drew investors from at least 23 countries with promises of lucrative 10% monthly returns. However, what started as an enticing opportunity soon unraveled into a massive pyramid and Ponzi-type scheme that left thousands of investors in financial ruin.
The collapse not only underscores the inherent risks associated with unregulated cryptocurrency ventures but also highlights the drawbacks when it comes to holding perpetrators accountable across borders. Its now-deceased CEO, Johann Steynberg, disappeared en route to Brazil.
The case mirrors the challenges in the international legal systems when it comes to enforcing rules against cryptocurrency fraud. Liquidators have gone on the warpath to recover assets involved in the scheme through issuing summonses and letters of demand to those from South Africa as well as other parts of the world.
Still, the process is challenging due to issues of jurisdiction, differences in regulation across regions, and the fact that many individuals behind the cybercrimes use fake names or work through anonymous networks.
The liquidators’ lawyers recommend against taking action on perpetrators in 35 of 84 countries, including Saudi Arabia, Venezuela, Mexico, Namibia, Nigeria, Ghana, China, the Philippines, Botswana and Germany. But they have considered proceeding in Bangladesh and Slovakia.
However, the discovery that a large proportion of recovered funds has been spent on legal fees and taxes poses questions regarding the effectiveness of the recovery process. While it is essential to punish the culprits and help victims, there is a significant drain on resources for administrative uses, pointing to the need for efficient means of retrieving assets in cases of cryptocurrency fraud.
Liquidators’ choice not to take legal actions against certain countries or persons due to obstacles such as being time-consuming or yielding low returns reveals the inefficiency of the legal course of action in the context of cross-border cryptocurrency scams.
It also has a lesson to teach: that it is important not to underestimate the risks of investing in new technologies. It emphasizes the need for diligence when investing in the cryptocurrency market. To date it is the largest pyramid or ponzi scheme to ever happen in South Africa, larger than Africrypt, BHI Trust, and Krion.
This is why, even when the rewards are so tempting and the expected yields so high, one should not forget to think critically and critically analyze potential investment opportunities, especially when there is no state regulation. As the market environment changes gradually, regulators and the police must be more careful to prevent investors from being scammed.
The events that led to the collapse of Mirror Trading International reveal weaknesses and difficulties that exist in the area of international cryptocurrency.
From the issues of the coordination of the police of different countries to the exhaustion of the money that has been recovered in courts, the case shows that the current legislation and the public should pay more attention to the regulation of the cryptocurrency market.
While authorities struggle with the consequences of MTI’s failure, the lessons learned from this case should be used to strengthen transparency and accountability for the emerging digital assets market and protect investors.
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