South African regulators will strengthen control of the cryptocurrency industry due to the closure of the Mirror Trading International fraud scheme, which managed to collect 23,000 BTC worth more than $700 million.
Financial Sector Supervisory Authority (FSCA) South Africa has reported on the spread of cryptocurrency pyramids. Mirror Trading International (MTI) has become the largest of them in the country. The firm has positioned itself as a platform for bitcoin trading and has attracted more than 260,000 people.
During the investigation, the FSCA found that the firm did not maintain accounting records and did not even have a customer database. The firm’s executives said they were misled by MTI CEO Johann Steynberg, who could have fled to Brazil. According to the firm’s lawyers, the FSCA has only established that MTI is trading without a license, but this does not necessarily indicate fraud.
The head of the FSCA’s enforcement division, Brandon Topham, said that criminal prosecution authorities should be able to stop such schemes even before they begin to spread en masse. Therefore, the authorities need to tighten control over the trading of cryptocurrencies. Topham urged users to exercise prudence and critically evaluate the information provided by cryptocurrency firms. He was immediately suspicious of MTI’s claims of a 10% monthly profit.
“I was once on a radio show where people called themselves” professional ponzi investors.” They encouraged other people to take risks, convincing them that this is the only way to earn good money. The police and the prosecutor’s office need to work quickly, and for organizing such schemes, you need to go to jail, ” Topham said.
In July, the Texas Securities Board banned MTI from operating in the state, calling the project a multi-level marketing scheme (MLM). The FSCA said the liquidators had not yet been able to trace all of the company’s assets. In addition, two other firms that may be linked to MTI are under investigation.
Recall that in 2018, in South Africa, the police uncovered another large cryptocurrency pyramid BTC Global, the victims of which were 28,000 people. Earlier, the Intergovernmental Working Group on Fintech (IFWG) of South Africa also proposed to tighten the regulation of the cryptocurrency industry, and not to assign the status of legal tender to digital assets. The FSCA recently introduced a bill that would require crypto assets to be treated as financial products.