Pyramid Scheme Collapse: Lawyers Pocket R185 million Before Victims Receive Repayment

The liquidation of South Africa's biggest pyramid scheme, Mirror Trading International (MTI), has been fraught with controversy as its liquidators and legal team have purportedly taken priority in payment distribution over the victims of this colossal scam, totalling a mammoth R185 million thus far.

MTI was a Bitcoin-fueled multi-level marketing scam that swindled members globally. Its exposure came from Anonymous ZA, investigative journalists, and informed community members in September 2020 who unravelled the poorly-constructed facade of its online platform. In December of the same year, CEO Johann Steynberg disappeared during a trip to Brazil, instigating the ensuing collapse of MTI. Legal proceedings for the liquidation of MTI’s estate promptly followed.

Electronic trading platform, Luno, reaped a cool R10.6 million from the sale of 1,281 bitcoins, previously frozen by MTI's former broker, FXChoice, because of dubious account activity. The liquidators were fortunate enough to sell these drastically valued digital assets, collectively worth almost R1.1 billion.

Beyond Luno's trading commission and the legal fees, the South African Revenue Service received over R283 million for settling outstanding tax disputes and an additional R29.6 million in income taxes.

The now-infamous pyramid scheme, which once had over 7,000 verified creditors, is now in flux as liquidators await a court order on how to manage claims. The current account reveals that under R635 million remains for claims and further legal charges.

Judging from the magnitude of MTI, whether it is valued at R19.1 billion or closer to R46 billion, it far surpasses the hefty estimates of past scams like the Krion Ponzi scheme and the Travel Ventures International's pyramid scheme. The ancillary costs of such broad-scale financial fraud will continue to affect South Africa financially and ethically for foreseeable future.