It’s a turn-up for the books of just about every liquidation you might have read about. Thanks to fantastic sleuthing, Riaan van Rooyen, who was appointed in December last year to wind up the crypto scam Mirror Trading International (MTI) — which duped 280,000 investors — has traced and recovered 1,281 bitcoins. And he reckons there are far more to come.
It’s a considerable haul since, usually when there’s a cryptocurrency scandal, the founder vanishes with the digital keys and the loot. In this case, the leading protagonist is computer programmer Johann Steynberg, 37, who was involved in a number of dubious get-rich-quick schemes before he founded MTI. Last December, Steynberg vanished, telling his wife he was going to Brazil after receiving an "anonymous" threat — and apparently he hasn’t been heard from since.
However, not only did Van Rooyen retrieve some of the bitcoins, he sold them at an average exchange rate of R825,000 — higher than the current bitcoin price of R535,000. The R1.05bn he has raised so far will go into the pot, to be split among all creditors.
"Yes, it’s a lot, but I can tell you, there’s far more out there too," he tells the FM.
While Van Rooyen and the other four liquidators have made a nice start, they’ve only found a small portion of the 23,000 bitcoins initially estimated to have been bought by MTI, which, at today’s value, would be worth R12bn. They are now hunting down the crypto wallets where the remaining coins are stashed.
However, it seems many of the MTI investors who lost money haven’t yet lodged claims with the liquidators. Says Van Rooyen: "Many people are afraid to contact us and lodge claims, for fear that they’ll have to pay back what they got first. But I can tell you, it’s not like any of those earlier Ponzi schemes, where those who lost were told to pay back — nobody who lost money will have to pay back a cent."
You can understand why investors would be skittish. In the Krion pyramid scheme, which blazed through working-class families in the Vaal Triangle in the late 1990s, the 30,000 people who lost R1bn were told by the liquidators to first repay anything they got, before the pot could be split up. In the end, after legal costs, there was almost nothing left.
That won’t happen here, says Van Rooyen. In many ways, MTI was a modern con perfectly suited for the online era. In its marketing, MTI used the fad currency of the day, bitcoin, and all the fuzzy, mindless buzzwords you’d want in a digital scam: "artificial intelligence" (AI), "forex" and "crypto trading".
Journalists warned that MTI had all the authenticity of a Carl Niehaus funeral
The way it worked was you "invested" at least $100 into bitcoins, which went into a "trading pool" used to finance a series of forex and crypto trades, executed with "exclusively contracted" AI software. (Steynberg, of course, wouldn’t say how this software worked.)
But, he claimed, MTI was able to produce an "average daily profit of 0.4%" — or 141% over eight months.
As if that wasn’t enough of a red flag, there were myriad warnings from all sides before it crashed. The regulator, the Financial Sector Conduct Authority (FSCA), said the returns were "far-fetched and unrealistic", while journalists at Moneyweb, Fin24, MyBroadband and the FM, as well as every investment professional, warned that MTI had all the authenticity of a Carl Niehaus funeral.
Last August, months before it popped, the FM described MTI as the "least convincing business model this side of the radical economic transformation magic money tree".
But even though Steynberg defended it at the time, the court papers reveal that behind the scenes, it was already unravelling. A report by the FSCA revealed that MTI lied almost from the start about how successful it was — even fabricating trading results to dupe new "investors".
In court papers, Van Rooyen said "the conclusion is inescapable" that all of the bitcoins held by MTI were either "siphoned away by Steynberg", used to pay "referral commissions" or used to pay back "fictitious profits". A classic Ponzi scheme, in other words.
By early December, when Steynberg fled, he’d lost control. And, predictably, within weeks the money dried up.
It’s easy now to say people should have read the tea leaves. But for those who sold their homes to invest in MTI, and are now homeless, that’s scant consolation.
Others made a killing — none more so than Steynberg’s pugnacious marketing sidekick Cheri Marks and her husband Clynton. Clynton, it turns out, owns 50% of MTI while Steynberg still holds the other 50%.
On June 15, Clynton and Cheri opposed the application in the Western Cape High Court to put MTI into final liquidation — saying the scheme still has enough assets to keep going.
The liquidators, however, argued quite rationally that you shouldn’t be trying to rescue an illegal scheme. The court, most likely, will agree with them when it rules later this week.
At the same time, a secret insolvency inquiry has been taking place to probe exactly how it all happened — and the details that have leaked out are fascinating.
For one thing, Steynberg’s wife, Nerina, told the inquiry that she hadn’t heard from him since December 14, according to Fin24. "Johann would never leave me, never leave his child. He is a good person," Fin24 quoted her as saying. "Someone must have done this to him."
And, intriguingly, Cheri Marks apparently told the inquiry she doesn’t believe Steynberg even boarded that flight to Brazil — and that he’s still hiding out in SA.
If so, there are a number of investors who’d like to have a quiet word with him.
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