Three years ago, a bitcoin pyramid scheme burst, reportedly leading to about 22,000 bitcoins of lost investor funds. In the aftermath, the CEO of the scam company, MTI, fled to Brazil, where he has now been arrested and jailed for identity fraud.
- Johann Steynberg, CEO of Mirror Trading International (MTI), was arrested in December 2021 on charges of identity fraud. At the time of his arrest, he owned three identity documents.
- The Brazilian court found him guilty and mandated him to pay a fine of 510,000 South African rands (about $27,000), reports said.
- However, in line with the Brazilian penal law that states that jail sentences of less than four years for non-violent crimes may be converted into fines, his prison sentence was converted into a fine of 85,000 rands ($4,469).
- Steynberg is expected to remain in prison until the outcome of his lawyers’ appeals and his extradition proceedings have been completed.
The MTI scam
- Founded in 2018, MTI presented itself as a bitcoin trading and investment company. It would be ranked two years later as the biggest Ponzi scam of 2020 by blockchain analytics firm Chainalysis.
- MTI asked members to invest in bitcoins, promising to trade using AI-enabled bots and guaranteeing a consistent 0.5% daily yield and 500% at the end of a year. Like most pyramid schemes, the company also offered huge referral bonuses.
- Things started to go south for MTI when the South African Financial Services Conduct Authority (FSCA) launched an investigation against the company in August 2020 and advised users to withdraw their money from the platform.
- The same year, the FSCA opened a criminal case against the company for illegal and misleading operations. The regulator also discovered that the company falsified statements and committed other acts of fraud to deceive the market.
- While MTI users tried — and failed — to withdraw their funds, the company admitted it could not obtain the bitcoins from its broker, Trade300. FSCA investigations revealed the ‘broker’ company was also run by Steynberg.
- The Brazilian police finally arrested Steynberg in 2021. There are no indications that he was or will be charged in Brazil for his fraudulent activities with MTI.
- Crypto pyramid and ponzi scams are not new in Africa, and while their operations have certain peculiarities, they are largely similar by design. They offer huge returns on investments and considerable bonuses in referrals.
- Last month, Mariblock reported on how unsuspecting Kenyans were defrauded of several thousand Kenyan shillings.
- The scam entity, BTCM Kenya, asked its users to deposit money to invest in Bitcoin mining equipment and earn as much as 350% ROI after a few days.
- The scheme has since fizzled out, with some saying its operators have now rebranded as ARGO and are using the same methods to defraud Kenyans.