South African regulators will tighten control of the cryptocurrency industry due to the closure of the fraudulent scheme Mirror Trading International, which managed to collect 23,000 BTC worth more than $ 700 million.
The Financial Sector Supervisory Authority (FSCA) of South Africa announced the proliferation of cryptocurrency pyramids. Mirror Trading International (MTI) has become the largest of these in the country. The firm has positioned itself as a Bitcoin trading platform and has attracted over 260,000 people.
During the investigation, the FSCA found out 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 established only that MTI is trading without a license, but this does not necessarily mean fraud.
FSCA’s head of enforcement, Brandon Topham, said prosecutors should be able to stop such schemes before they start to spread massively. Therefore, the authorities need to tighten control over cryptocurrency trading. Topham urged users to exercise prudence and to critically evaluate information provided by cryptocurrency firms. He was immediately suspicious of MTI’s claims of 10% monthly profit.
“I was on a radio show once where people called themselves ‘professional ponzi investors.’ They encouraged other people to take risks, convincing them that this was the only way to make good money. The police and the prosecutor’s office must 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 multilevel marketing (MLM) scheme. The FSCA said the liquidators have not yet been able to trace all of the company’s assets. In addition, there are two other firms under investigation that may be associated with MTI.
Recall that in 2018 in South Africa, the police uncovered another large cryptocurrency pyramid, BTC Global, which killed 28,000 people. Earlier, the Intergovernmental Fintech Working Group (IFWG) of South Africa also proposed to tighten the regulation of the cryptocurrency industry, and not to assign legal tender status to digital assets. The FSCA recently introduced a bill that would require crypto assets to be treated as financial products.
