RYK VAN NIEKERK: The Financial Sector Conduct Authority regulator, or the FSCA, has announced thatit is investigating the activities of Mirror Trading International, or MTI. The FSCA has also advised MTI’s clients to withdraw their money as soon as possible. MTI is based in Stellenbosch and offers investors yields from trading in Bitcoin. According to the group’s website, all investments are put into a common pool, and then an artificial intelligence system or digital robot takes over and makes money trading in Bitcoin. Participants all share in the proceeds. Members also receive a commission of 10% if they recruit new members. The group alleges it has more than 100 000 members in 190 countries across the globe.
Gerhard van Deventer, the head of investigations at the FSCA is on the line. Gerhard, welcome to the programme. Why are you investigating MTI?
GERHARD VAN DEVENTER: Good evening to you Ryk and your listeners. We have been investigating it for a few weeks. There are clearly huge concerns at the FSCA regarding MTI. The type of promises or allegations of average profits of 10% a month are just too good to be true. We have interrogated them twice, and during our interaction they indeed offered all clients the option to withdraw their assets. These are not actually monies, because they are in crypto. That’s why we are encouraging clients to withdraw.
At this stage we are some way into the investigation, and we are struggling to get any confirmation of the allegations made by MTI. We are working together with regulators in other countries, and at this point things do not look good in the investigation.
RYK VAN NIEKERK: There are claims that R2.9 billion has already been “invested” in MTI. Have you been able to verify that R2.9 billion?
GERHARD VAN DEVENTER: Unfortunately not. We have really tried our best to do so. There have been attempts by MTI to persuade that the money lies in a certain platform account, but unfortunately the platform is in no position to confirm this, so we are holding thumbs for investors. But no, we have been unable to confirm this.
RYK VAN NIEKERK: Do you know how many South African investors have deposited money in MTI?
GERHARD VAN DEVENTER: No, we don’t yet know. We have asked MTI for this information in terms of our authority and hey have refused to answer. So at this stage we don’t know how these clients are distributed across the 185 countries, but this is of course something we’ll give close attention to.
RYK VAN NIEKERK: How have you so far experienced interaction with the MTI management during your investigation? Have they been cooperative?
GERHARD VAN DEVENTER: The interaction has been very strange. We have questioned Mr Steynberg personally, as well as one of his directors, Cheri Marks. To us it was quite apparent that there was a great deal of detail regarding which the management could not assist us. Although MTI consistently said they were entirely willing to cooperate, even through their attorneys, there is information which we were unable to obtain.
So I now do not have faith in their cooperation, because what they present to their clients is in direct contrast to what we have to say about the issue.
RYK VAN NIEKERK: You have referred to Mr Steynberg, That is Johan Steynberg, the CEO and the founder of Mirror Trading International. There have also been regulators in other countries who have been looking into MTI. One is the Texas regulator, who told MTI to cease its Texan operations immediately, and who claimed it to be a pyramid scheme. And then another group, FX Choice, MTI’s previous platform broker, put a stop to the group’s activities. Have you liaised with this entity at all?
GERHARD VAN DEVENTER: Yes, we have. In terms of our relationships with other regulators we are exchanging information. FX Choice is the former platform that MTI says they used, and where clients’ assets originally were placed. We therefore consider FX Choice a very important witness, and we are receiving full cooperation from that platform.
RYK VAN NIEKERK: Should I be an MTI client at this point, what would you advise me to do?
GERHARD VAN DEVENTER: I would certainly suggest that you take up the offer to withdraw your assets until this matter has been finalised, and it becomes clear exactly where the assets are held – also in light of the whole licensing of MTI. They are currently an unlicensed operator, and this unlicensed business is breaking the law. So I would certainly advise you to put your money or assets safely away until everything has been sorted out.
RYK VAN NIEKERK: What is the next step in your investigation? What happens next?
GERHARD VAN DEVENTER: We have to complete the investigation. There is still a considerable amount of work to do, and then we’ll have to consider how to take the issue forward – whether to apply our own regulatory actions or bring in other South African regulatory bodies..
RYK VAN NIEKERK: Gerhard, thank you for your time this evening. That was Gerhard van Deventer, head of investigations at the FSCA.
I now have Cheri Marks on the line. She is from Mirrors Trading international. Cheri, welcome to the programme. You have heard what Gerhard said regarding the investigation into MTI’s activities. What is your response?
CHERI MARKS:Good evening, Ryk. Thank you very much for the opportunity, and we appreciate you hearing from us tonight.
You know what, I think the FSCA has a procedure they need to follow, and we respect that. I know about the many fraudulent schemes that crop up every day, but . MTI certainly does not fall in that category, despite what I hear goes on in the industry. For us, it’s just a way to help the ordinary person in the crypto space, and our intention is to offer our clients a service.
RYK VAN NIEKERK: Could we just quickly look at what MTI does? Are you able to summarise the value or moneymaking opportunities you offer investors?
CHERI MARKS: Primarily, MTI does not guarantee any yields. I think this very important for people to realise. We offer our members a service as to how they can grow their Bitcoin portfolio at MTI. We are an online opportunity that works with Bitcoin and, as the FSCA itself says, they have no regulations regarding crypto. We therefore fall outside their mandate, which is ultimately a very confusing space. But for us it’s about delivering a service to our members in the crypto space, helping them grow their Bitcoin by means of trading as indicated by our digital robot.
RYK VAN NIEKERK: Now, the digital robot is interesting, and I read somewhere that you basically make money every day. You never lose money. Is it possible that a computer program can make money every single day by trading Bitcoin?
CHERI MARKS: You know, in this industry I think it’s important for people to know that its quite normal for digital robots to do very well in this industry. But, to ask us for formula for our robot is like asking Coca-Cola how they conduct their business. Our digital robot is our best acquisition in MTI, and there are negative trades day by day. It’s just that at the end of the day we close positive.
On June 7 this year we did have a negative trading day of about 0.3%. But, other than that instance, over the past 18 months we have not experienced a negative trading day. That is, of course, when you take into account the entire day’s trading. But individually there have not been day-to-day negative days.
RYK VAN NIEKERK: I have to say it’s rather concerning that the FSCA advises MTI clients to withdraw their money; this after a Texas regulator said you may not operate there. And your former platform said you could no longer trade on it, and there are suspicious things happening at MTI. How do you respond to those developments?
CHERI MARKS: We welcome the FSCA’s inputs, and we need to clarify things. But we believe that MTI’s social and economic responsibility to our members forms the core focus. If all our members withdraw their MTI portfolios, we would be happy to have helped people to grow their Bitcoin. One of the services that we offer our members is to allow them to withdraw.
Now, with regard to the Texas State Securities Board, we are comfortable to work with it. We have a handful of members in Texas, and we will see what we can do to satisfy the authority for the sake of our members there. We are in in the process of doing so, and we are comfortable with the progress already made.
And, as for FX Choice, at the end of July this year we moved to another broker who works more in the crypto space, making it better for our business to offer its clients our services. So it’s not a matter of FX Choice letting us go, but rather the other way round, with our deciding we needed a broker who understands crypto and who can offer us crypto services.
RYK VAN NIEKERK: You also offer members the opportunity to recruit others, who will earn a 10% commission. If you are so confident that your algorithms are making money every day, why should new members get a commission to recruit others?
I always find it interesting that people are so opposed to the idea of referring others. If you take a look at any business, referrals are a not an illegal marketing strategy, and are something many businesses in other industries make use of.
That is essentially the marketing strategy we decided upon, and I think that’s why we are growing so effectively. The 10% referral fee is paid from MTI’s own pocket; it’s part of our marketing strategy. It also gives our members an opportunity to gain a second income. There is nothing new about it, nothing strange. It’s definitely a very good marketing strategy and something we are firmly believe in.
RYK VAN NIEKERK: How much money have you already raised, and from how many people?
CHERI MARKS:We have been very fortunate. Precisely because we deal in the Bitcoin crypto space we can comfortably do business across the world. We have 130 000 members in 190 countries, and our Bitcoin trading balance involves 14 000 Bitcoin.
RYK VAN NIEKERK: Then the big question arises: if you are so big, why do you not have the necessary financial services licence to operate in South Africa ?
CHERI MARKS:I think that question is to be expected. I can understand that, precisely because of the negative perceptions attached to this industry, people would first pose that question. But MTI is, firstly, an online opportunity and we work with Bitcoin. At no point do we work with fiat currencies. As I said, the FSCA itself says that there are no regulations covering crypto. It’s a bewildering area and we have even offered our services to help with regulation. But at the end of the day we fall outside their mandate. That’s why we feel it unnecessary to knock on the FSCA’s door.
RYK VAN NIEKERK: What are the typical yields that you’ve delivered to investors in recent months? Can you expand on that?
CHERI MARKS:We make it clear to our members that they and the public understand that, although we have a fantastic track record, that does not affect our future results. But over the past 18 months we have done particularly well, and we have delivered a daily average Bitcoin growth of 0.4% to 0% to our members. To the extent that we are proud of that, we know that it’s difficult to maintain it, and we are very set for that continuing. But it’s important for members to know that it has absolutely no effect on future results.
RYK VAN NIEKERK: The 0.4% per day – if my calculation is correct, that’s about 16% a month.
CHERI MARKS: As I say, that varies. You might get 0.1% or 0.3% on one day; yesterday Ithink it was 0.1%. So we achieve between 8% and 10% a month. That has been our track record for the past few months.
RYK VAN NIEKERK: Then, finally, how many MTI clients have started withdrawing their money after the FSCA advised them to do so?
CHERI MARKS:Ryk, that’s very interesting. The message from MTI’s members is that members feel they are part of something making a difference. Precisely for that reason we haven’t had major withdrawals or amass exodus, if you put it like that. But those withdrawals are encouraged by MTI. We want people to use their Bitcoin.We want people to see something good resulting from our services to themselves and their families. We are determined to change that perception in this industry, and to serve our members with our product. We are excited about the future.
RYK VAN NIEKERK:Cheri, thank you for your time this evening. That was Ceri Marks from Mirror Trading International. Theo?
THEO VORSTER: Ryk, let me say this. I have no knowledge of that system. On the contrary. Today I had my first look at FSCA’s documentation regarding what they have been doing, so I have no specific knowledge about them.
However, there are two things that stand out for me. The first is, in my experience, if someone makes money from a “black box”, if there is some special formula printing money, to multiply money, beating yields, that’s is a red flag. I have too often seen such “boxes”. Remember, if you make an investment, if you invest something, or when you buy a car, you kick the car’s tyres. If you make an investment, you need to know where the physical underlying asset that grows is. If it’s a cow, it can calve.If it’s a building, there are tenants. If it’s a company, you can drive past Woolies and see there are people. You can kick the tyres. But if it’s a black box, you have no idea what’s going on inside. If it’s a secret formula, a black box, red flag!
Secondly, 8% to 10% a month – if you can achieve that, you will be the first person in the history of the world of investments to manage to do so.
I am extremely concerned when one talks of those types of yield. They simply do not exist, and when they do it means there is a massive risk attached – and you have no idea what the risk is. So when it exists that means there is a massive risk attached, and you don’t know what it is. In this case, the question is: 8-10% a month – does that reward the risk? I’m not so sure, simply because I don’t know where I can kick its tyres.
RYK VAN NIEKERK: I have been in the media for over 20 years, and I know you have been in the financial services industry for very long. I have never encountered a computer program or a digital robot or anything like that that continuously makes money. I’ve not seen that algorithm anywhere else in the world, and there have been many who have tried very hard to make money from such programs.
THEO VORSTER: And there are people who have been very successful at times, and even succeeded for longer periods. That is so. But unfortunately there’s a risk. The question you need to ask is whether a yield of 8% to 10% a month is worth the risk. The problem is, you can’t go and kick the tyres anywhere, you don’t know what the asset involves. And that’s why I’d rather say if you want that type of yield now, post lockdown, go to a casino. It will give you free drinks and you can enjoy an evening’sentertainment and walk out with the same amount of money.
RYK VAN NIEKERK:Theo Vorster is from Galileo Capital.