Chainalysis called the Mirror Trading International (MTI) scheme as the largest investment scam of 2020, in a recent review of crypto-related crimes. The scheme was labeled so, after having roped in $588 million worth of Bitcoins across 470,000 transactions.
Chainalysis is a data firm that assists government organizations, crypto businesses, and financial establishments engage with cryptocurrency with assurance.
The trading and networking company that used Bitcoin as its base currency is based in South Africa and is now under serious scrutiny. After being temporarily liquidated in 2020 December, MTI is being scrutinized again. The South African finance-industry regulators now want more power to prosecute the culprits who have committed the fraud.
The scheme advertised itself as a source of regular earnings requiring little to no effort. As per the information on the website, consumers were required to deposit $100 worth of Bitcoin. In return of the minimum deposit amount, MTI promised to multiply it through an Artificial Intelligence-powered foreign exchange trading software.
The scheme claimed that users could consistently get daily returns of 0.5%, which would result in annual gains of 500%.
Algorithmic trading such as this, providing pre-programmed trading instructions is a common idea for many crypto investment scams.
Previously in 2020, a crypto leading news site, CoinDesk warned all MTI users to withdraw their funds immediately. The news portal informed the users about Texas state regulators’ decision wherein they had labeled the company a scam. Additionally, there was an inquiry pending against the company by South Africa’s Financial Services Conduct Authority (FSCA).
The FSCA took action against MTI back in 2020 after having found that the company had fabricated trade statements. During the investigation, the FSCA was also apprised of the fact that MTI hadn’t declared losses, and committed other fraudulent activities.
Additionally, the investigation also found that MTI had unaccounted for customer investment funds of over 16,000 Bitcoin. On being inquired, MTI made claims that those funds were moved to a new FX trading platform. MTI claimed that this was done since its old platform banned it owing to the scamming reputation. However, on investigation, it was revealed that the new platforms never had any such funds deposited.
MTI customers have been complaining about not being able to withdraw or having access to their funds, ever since these charges have been framed. To make matters worse for the customers, MTI’s chief executive officer, Johan Steynberg has gone missing.
Chainalysis reiterated the importance of awareness with regard to algorithmic trading scams. It warned users that claims of irrationally high returns are almost always a fraudulent scheme.
The data firm added that cryptocurrency exchanges and other services upon learning about such scams should dissuade users from sending funds. If not this, then at least a warning about the high likelihood of financial losses should be given.
Exchanges, gambling platforms and other services should work in harmony with the relevant government bodies. All trading businesses that are labelled as scams by the government should be blocked by these platforms.