Forensic analysis shows the failed bitcoin scheme had far fewer members than previously thought.
A clearer picture is emerging of Mirror Trading International (MTI), the bitcoin scheme that collapsed in December 2020 when founder and CEO Johann Steynberg fled to Brazil.
It was widely reported that the scheme, which promised members returns of 10% a month, had close to 300 000 members. The actual figure is close to one-tenth of this, according to a forensic analysis provided to Moneyweb by the liquidators.
In response to a Moneyweb request for more details on the breakdown of the member base, the analysis by the liquidators shows slightly fewer than 34 000 individual members, out of the 304 000 total number of accounts.
This means close to 90% of the accounts were so-called ‘slave accounts’ set up by investors to earn commissions for introducing new members to the scheme.
MTI was a multi-level marketing scheme paying commissions of 10% on earnings on new members introduced.
Some individuals had more than 20 ‘slave accounts’ – set up in the name of family members, fictitious identities, domestic servants, and family pets, all for the purpose of earning commissions on funds deposited by ‘downline’ members.
What is also clear from the forensic analysis is that creditor claims are starting to pour in ahead of the next creditors meeting on 23 November 2022.
This sudden burst of claims follows news that the liquidators are contesting the attempt by the South African Revenue Service (Sars) to grab R931 million of the R1.1 billion in bitcoin (BTC) recovered by the liquidators from the Belize-based broker FX Choice.
The 1 281 BTC recovered were then sold for an average price of about R850 000 (more than double the current price of R370 000).
A total of R957 million in claims has been received by the liquidators from more than 4 000 members. This does not include the Sars claim for R931 million, which may or may not be accepted by the liquidators.
Winners and losers, and their ‘slave’ ratios
The forensic analysis shows of the 304 000 accounts in MTI, about 50 000 were dormant, leaving 254 000 active accounts.
These are subdivided into winners and losers, winners being those that withdrew more than they deposited into the scheme, and losers being those who withdrew less than deposited into MTI.
Of the roughly 34 000 individual investors in the scheme, about 15 300 – slightly less than half – were losers. However, there are more than 180 000 ‘slave’ accounts registered to individual losers in MTI.
There are far fewer slave accounts among the winners – a total of 36 460, compared with 183 552 among the losers.
This suggests that losers were more inclined to build a large downline of ‘slave accounts’ – often funded with their own money – to earn a big payday at some point in the future.
This analysis buttresses the claim that it was nothing more than a Ponzi scheme, the older members being paid out with fresh money attracted to the scheme.
It all fell apart in December 2020 when MTI stopped processing requests for withdrawals and Steynberg disappeared. He was arrested a year later in Brazil and remains in custody while SA authorities are applying to have him extradited.
US authorities are reportedly also keen to get their hands on him because several thousand American citizens were roped into the scheme.
Steynberg is presumed to have knowledge about the missing bitcoin.