South African financial regulator, the Financial Sector Conduct Authority (FSCA), has filed criminal charges with local law enforcement against Mirror Trading International (MTI), the alleged online bitcoin trading scam. The regulator says its decision to press charges follows an investigation into MTI that unearthed the companyâ€™s use of fake trade statements, undeclared losses, and possible fraud involving thousands of bitcoins.
Bogus Trading Statements
The ongoing probeâ€™s preliminary findings seem to contradict claims by MTIâ€™s executives that their companyâ€™s trading bot has â€œaveraged a return of 10% per month, and that MTI has never had a negative profit trading day, but for one exception.â€ The findings also appear to contradict past denials by MTI CEO Johann Steynberg, who was slapped with a cease and desist order by U.S. regulators, that his organization is running a scam operation.
According to a statement issued on Dec.17, the FSCA accuses MTIâ€™s executives of repeatedly using â€œtrading statements based on demo trading accounts and not actual trades.â€ The practice, which is seemingly intended to reassure investors of MTIâ€™s profitability, was uncovered by FX Choice, a Belize-registered online trading platform.
As reported by news.Bitcoin.com, FX Choice blocked MTI accounts after discovering that the latter was running a multi-level marketing scam. Meanwhile, as part of its investigation, the FSCA says it reached out and obtained evidence from FX Choice which proves that MTI actively engaged in an effort to mislead its investors.
After its relationship with FX Choice ended, MTI started dealing with another online trading platform, Trade 300. Interestingly, the FSCA says it found evidence on a desktop seized during a raid on the residence of one MTI executive suggesting that Steynberg controls Trade 300.
The Missing Bitcoins
In the meantime, the FSCA suggests that the freezing of MTIâ€™s account with FX Choice opened a can of worms. According to the regulator, investigations show that â€œthe total (number of) frozen crypto assets on FX Choice is a negligible amountâ€ when compared with â€œtotal assets that MTI claimed it invested on behalf of its clients.â€ The FSCA explains this inconsistency as follows:
FX Choice confirmed that MTI put in 1846.72 bitcoin from 29 January 2020 until 3 June 2020 and made a loss of 566.68 bitcoin, an approximate capital loss of 30%.
Yet when it had its fallout with FX Choice, MTI claimed it â€œtransferred 16,444 bitcoin from FX Choice to Trade 300 in 4 installments on 21 July 2020; 22 July 2020 and 24 July 2020 respectively.â€
Meanwhile, after conducting its own investigation, the FSCA says it found no evidence to support MTIâ€™s claim that it did transfer the 16,444 BTC. The regulator explains:
The FSCA found that no withdrawal of bitcoin by MTI from FX Choice occurred in July 2020. The last withdrawal of bitcoin by MTI from FX Choice was conducted in August 2019. Further, FX Choice confirmed that none of the eight sending wallets is related to FX Choice and that FX Choice had neither received deposits from nor sent any payments to any of the eight bitcoin wallets.â€
Perhaps in a sign that the MTI bitcoin scam is beginning to unravel, the regulator reveals that it has been receiving â€œcomplaints that investors were unable to redeem their investments.â€ On social media, which Steynberg and his associates used widely to refute scam allegations, anxious investors are complaining of â€œdelayedâ€ withdrawals.