South Africa’s Financial Sector Conduct Authority has bluntly stated:
MTI and its senior management are conducting an illegal operation, misleading clients and have contravened several laws.
The statement was published as part of a December 17th press-release, updating the public on the status of the FSCA’s investigation.
The FSCA first warned the public against investing in Mirror Trading International back in August.
The FSCA’s ongoing investigation then led to raids and asset seizures in October.
As of December 17th, the FSCA advises its investigation into MTI is “near completion”.
For your popcorn consuming pleasure, the FSCA have indulged us with a peek into what their investigation has found so far.
Steynberg testified under oath, that from April 2019 to July 2019, member trading accounts were linked to a professional trader appointed by MTI through a multi account manager arrangement linked to Meta Trader 4.
Trading was conducted in derivative instruments based on forex pairs.
However, according to Steynberg MTI experienced substantial losses (of up to 80%), and as a result, MTI requested its members to delink their respective FXChoice accounts from the multi account manager account and move their bitcoin to a pooled account.
Steynberg refers to Mirror Trading International CEO Johan Steynberg (right).
FX Choice confirmed the FSCA’s findings back in August.
As a result, from August 2019 Steynberg claimed that MTI employed a bot (high frequency artificial intelligence trading) together with a head trader and trading team to make all its trading decisions, with great success.
The Authority found evidence contradicting this assertion.
In response to the regulatory crackdown, Cheri Marks has frequently pushed the defense that bitcoin investment opportunities are exempt from South African securities law.
BehindMLM maintains there isn’t a country on the planet that exempts bitcoin investment opportunities from securities regulation.
Not surprisingly, the FSCA agrees.
During October 2020, after the FSCA informed MTI that it was an conducting illegal unregistered financial services business, MTI claimed that it changed its trading activities to trade in derivative instruments based on crypto currency (Bitcoin), so that it no longer fell within the jurisdiction of the FSCA, and that it no longer required an FSP licence (financial services provider licence).
This is also incorrect as the submissions received from Steynberg revealed that the crypto was alleged to be traded in the form of a derivative product, which would have required registration with the FSCA as well.
Another point of defense Cheri put forth is that the FSCA saw “live trading” taking place.
BehindMLM maintains that “live trading” isn’t evidence of ROI revenue being using to pay affiliate withdrawals. Nor is it a substitute for registration with financial regulators.
Furthermore, the FSCA advises;
We have found no evidence that any crypto trading is being conducted as communicated with members of MTI.
This suggests that beyond the marketing presentation MTI put on for the FSCA, no evidence of trading revenue being used to pay affiliates exists.
The broker MTI claims to be currently using to trade is Trade300.
According to Steynberg, Trade300 is another on-line trading platform.
At Trade300 MTI experienced the same extraordinary profits utilising the bot – but at this stage trading in crypto derivatives.
Steynberg stated under oath and repeatedly in the press that the bot trading averaged a return of 10% per month, and that MTI has never had a negative profit trading day, but for one exception.
Marks also repeatedly confirmed the trading successes on social media.
The FSCA obtained evidence from FXChoice, a Belize registered on-line trading platform, that is in complete contradiction with the claims of Steynberg and Marks.
According to FXChoice they received queries from clients of MTI and in the process the clients provided FXChoice with trading statements.
The source of the trading statements was MTI.
These trading statements were based on demo trading accounts and not actual trades.
As a result, FXChoice froze the balance of the crypto assets linked to MTI on the FXChoice platform.
However, the total frozen crypto assets on FXChoice is a negligible amount, taking into account the total assets that MTI claimed it invested on behalf of its clients.
FXChoice 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%.
The FSCA attempted to track down Trade300 to obtain a statement and trading details from it, to verify the version of MTI.
MTI did not provide any useful details that assisted the FSCA.
Just so we’re clear, MTI was paying an average 10% monthly return while trading an insignificant sum of money on FX Choice – which resulted in losses anyway.
When FX Choice cut them off they moved to Trade300, and claim to be making enough to pay affiliate withdrawal requests.
Except neither Trade300 or MTI will show evidence of trading revenue being generated and used to pay affiliates to the FSCA.
Riiiiiiiiiiiiiiiiiiiight.
The reason Trade300 hasn’t responded to the FSCA’s enquiries… is because of course Trade300 doesn’t exist.
The FSCA followed all possible links on the internet to establish whether Trade300 existed. It could only find one reference to Trade300; i.e. the website of Trade300.
However, the website was and still is “under maintenance”, and the only reference linked to the website is the name of “Joe Steyn”, a known alias of Steynberg.
It’s a made up entity.
In addition to lying about the source of withdrawal funds (new investment) and their trading activity, MTI also lied to the FSCA about transferring investor funds.
As a further effort to verify the evidence of MTI, Steynberg and Marks, the FSCA requested information from MTI about the transfer of clients’ assets from FXChoice to Trade300.
MTI, in support of its assertion purported to provide proof of the transfer in the form of Bitcoin wallets, stating that MTI transferred 16 444 Bitcoin from FXChoice to Trade300 in 4 instalments on 21 July 2020; 22 July 2020 and 24 July 2020 respectively.
The FSCA found that no withdrawal of bitcoin by MTI from FXChoice occurred in July 2020.
The last withdrawal of bitcoin by MTI from FXChoice was conducted in August 2019.
FX Choice didn’t boot MTI until August 2020. From August 2019 to August 2020 MTI was representing it was using trading revenue, derived from FX Choice, to pay withdrawals.
Bit hard to use trading revenue to pay withdrawals when you aren’t withdrawing anything from your alleged trading platform hey.
Further, FX Choice confirmed that none of the eight sending wallets are related to FX Choice and that FX Choice had neither received deposits from nor sent any payments to any of the eight bitcoin wallets.
Bit hard to feign trading when you’re not funding your alleged trading accounts either.
We have found no evidence of any significant store of Crypto assets on any trading platform and that most crypto balances appear in the name and under control of Steynberg.
The amount of such balances is well below the advertised balance on the MTI trading platform as being due to investors of MTI.
If it wasn’t obvious already, bitcoin invested into Mirror Trading International was never sent to any trading platform. It was shuffled around by Johan Steynberg and the Marks, to primarily benefit Johan Steynberg and the Marks.
And as the regulatory noose around the Mirror Trading International scammers tightens;
In the last few days, we received complaints that investors were unable to redeem their investments.
As I’ve long suspected, Mirror Trading International is run by Cheri and Clynton Marks (right). Steynberg is an accomplice, but doesn’t actually run the company.
The FSCA’s investigation appears to have confirmed this;
Mr Cornelius Johannes Steynberg, CEO of MTI has actively assisted in the operations by Mr Clynton Hugh Marks and Mrs Cheri Marks (“Marks”).
The FSCA’s investigation has led to a criminal case being filed with South African Police.
I’m not sure on the wisdom of informing Steynberg and the Marks of their pending arrest, but I hope SA authorities are watching their borders closely.