The MTI Ponzi scheme is considered the biggest crypto scam of 2020 – not just in South Africa but in the entirety of global financial markets.
Orchestrated by Johann Steynberg, Mirror Trading International successfully penetrated the South African financial markets by promising a consistent 10% monthly investment return from their Bitcoin investment.
However, 2020 changed the game for this investment-fronting Ponzi scheme as its unethical practices unraveled in the public. Dealing several blows from the Anonynous ZA, Financial Sector Conduct Authority (FSCA), and the Western Cape High Court, MTI inevitably collapsed in 2020 after the CEO flew off South Africa.
Read here about what happened to Mirror Trading International and the best practices for staying safe amidst the surge of investment scams in South Africa.
Mirror Trading International as Cryptocurrency Club
Operated by Johann Steynberg, Mirror Trading International (MTI) is a South African cryptocurrency club-fronting Ponzi scheme.
By club, it means that the company forms a group of cryptocurrency holders who are willing to invest in the forex market. The club members can buy cryptocurrency through the club or migrate their existing crypto into the MTI crypto wallet.
The holdings stored in the crypto wallet were then used for trading on MTI’s forex platform, Broker of Choice (FXChoice Ltd).
By promising “truly passive income” and an AI trading system, the crypto club garnered an estimated 300,000 investors from over 200 countries. Additionally, the management handled around R32 Billion from all transactions.
However, the FSCA claimed that the company was not authorized by the regulator and that it had never applied for an FPS license.
Read the FSCA Press Release Regarding the matter:
The Hacking Group “Anonymous ZA” Made the Scheme into The Public
In September 2020, Anonymous ZA managed to hack the club’s website. The hacking group then discovered the security vulnerabilities within MTI’s online system and the MTI balance sheet.
Anonymous claimed that any registered member can view the information of any other members as they wish. This includes information such as full names, usernames, email addresses, Bitcoin balances, and earnings.
They simply log into the mymticlub.com dashboard and change the URL parameter to reflect the ID number of other members.
Interestingly, the balance sheet revealed that a huge amount of BTC (around 9,916) was allocated for member bonuses (The Hole). Coupled with FSCA’s claim of non-existent trading funds, the Hole further established that MTI is just another Ponzi scheme.
The Western Cape High Court Ruled Against Mirror Trading International
The South African High Court, headed by Judge Alma de Wet, finally declared Mirror Trading International a Ponzi scheme.
According to the judge, the business clearly exhibited numerous unlawful schemes. Such schemes included the promise of guaranteed high returns, paying out bonuses for recruitment, and generating returns on investments for earlier members with the money taken from later investors.
Huge Bonus for Members Who Introduce New Members
Anonymous ZA revealed that over 9,916 bitcoins were allocated to the members’ interests and bonuses- by recruiting members.
One notable example is Ignatius Bell, an early investor and promoter of MTI. Bell used different social media platforms to promote the scheme, including YouTube, where he uploaded testimonials and earning stories to attract investors.
This approach became effective for him as he managed to recruit 190,000 investors.
Despite making no additional investment aside from his initial R7000 investment, Bell earned around R6 million a month. This shows that all his earnings were made from recruiting more people to further the pyramid scheme.
Non-Existent Trading Robots and Trading Funds
One notable service of MTI is its sophisticated trading bot.
The business claimed that the trading robot generated a consistent profit of 10% per month and an average return of 0.5% per day.
However, High Court Judge de Wet confirmed that all “reports that the bot traded in real-time were false” and that no such robot existed within the MTI ecosystem.
All Bitcoin investments for forex trading were directed into the back office instead of the market. The FSCA supports this, as the regulatory body cannot confirm the existence of such a trading fund in the market.
Here’s the full Press Release of the FSCA about the existence of MTI trading funds:
How to Stay Safe Amidst the Surge of Ponzi Schemes in South Africa?
Ponzi schemes, holding a promise for guaranteed high returns, remain persistent in South Africa, especially since they target the optimism and desperation of South African investors to have a better financial future.
However, behind all the promised benefits are crushing schemes that drain investors’ hope and hard-earned money.
Here are what you can do to ensure your investment won’t fall into the hands of Ponzi scheme operators:
Don’t Fall for Too Good to Be True Promises
It’s natural for humans to be emotional; to feel greed, excitement, and fear.
This becomes especially true when their hard-earned money and financial future are on the line.
However, such emotions fuel the desire of Ponzi scheme operators. It becomes an avenue for them to lure you into joining the scheme because their promises fit just right into your financial dream.
However, remember that when it’s too good to be true, it’s surely untrue.
Promises such as guaranteed and consistent high investment returns with minimal risk are physically impossible, especially in highly volatile markets like forex and cryptocurrency.
Always Research the Business Plan Structure
Like MTI’s, the business plan structure reveals that MTI’s sole source of income and revenue is through the investment of new members.
This raises a red flag about the business’s ability to keep up with the growing demand for payout, let alone sustain the risky forex trading.
Scrutinize Documentation and Registration
Before hopping into the investment product, it’s essential to be familiar with the terms and conditions of the company. This ensures that you know what goes on and what will happen to your money when you invest it in the company.
Additionally, always be proactive when checking the company’s registration and regulatory compliance.
A regulatory body should monitor the operations of all financial service providers, like investment companies, to ensure fairness across all their business operations.
Join A Verified Online Trading Community
A verified online trading community employs stringent procedures to ensure the validity of the information circulating around the platform.
This procedure ensures the network is safe from marketers or fraudsters who aim to deceive unsuspecting investors into buying their products or services.
