South Africa Finance Regulator Seeks More Power to Prosecute BTC Perpetrators

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The Financial Sector Conduct Authority in South Africa is asking for more power in prosecuting Bitcoin perpetrators. An emerging market for crypto casinos and other crypto-fueled industries, South Africans love using Bitcoin. That may all be going down the drain if the watchdog gets the power it needs to take down Bitcoin, Litecoin, and Ethereum operations.

The regulator is seeking for more power after an alleged Ponzi scheme involving Bitcoin led to the collapse of a Bitcoin trader. The watchdog’s head Brandon Topham is asking for help and claims that the moment something turns into a Ponzi scheme, the watchdog’s hands are already tied. If the government hands more power to the regulator, all types of crypto businesses could be in trouble, including Bitcoin gambling.

The Fall of MTI

Mirror Trading International, a Bitcoin trader that was taken down by a Ponzi scheme, announced that it has around 23,000 BTC back in November 2020. That’s close to $740 million. The company was put in provisional liquidation last month leaving clients without their money. In a December 22 email memo, the company’s management said that they were misled by CFO Johann Steynberg who has fled to Brazil.

An investigation was launched immediately with the FSCA handing details of the probe to a high-ranking police unit. Temporary overseers are now working hard to trace MTI’s investors in order to recover the firm’s assets. Some early investors have lost millions of rands, and it’s hard to tell if they could ever be recovered.

So far, the regulator has only discovered that MTI operated without a license. The ongoing investigation hasn’t found any details of MTI being a Ponzi scheme, but rumors are calling it that. In 2020, the company set out to learn what the requirements are for a trading license. After seeing that it would take too much, CFO Steynberg moved the firm to crypto-trading as it didn’t require a license at all. Live trades were presented to the MSTA and every request from the FSCA was met with swift response from MTI.

Not a year later, Mirror Trading International fall apart and thousands of people are left without their money.

In Line with Bitcoin’s Price Increase

MIT’s fall comes in line with Bitcoin’s price increase. While that may be a simple coincidence, some experts have claimed that the price jump was fueled by crypto scams in many countries. That can’t be confirmed and Bitcoin is still flying high, so those accusations may be completely wrong.

On the other hand, FSCA’s request for more power to prevent further situations similar to this one couldn’t come at a worse time. The South African Bitcoin gambling market is on the rise as are several other industries. Young Africans are investing in Bitcoin, and MTI’s fall isn’t supposed to make things easy for them.

One thing’s for sure – companies such as MTI and people like Steynberg are holding the crypto industry back. Maybe giving the FSCA the power it needs for crackdowns isn’t such a bad thing, if everything is kept by the book.

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January 27, 2021: • No Comments

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