MTI liquidation devolves into fight with SA government
The liquidation of Mirror Trading International has devolved into a fight between liquidators and the government.
BehindMLM previously reported on SARS, South Africa’s IRS equivalent, demanding liquidators surrender $34.46 million. This amount is just shy of the entire amount thus far recovered.
Last week SARS escalated its efforts, seeking to intervene in MTI liquidation proceedings.
As per a motion filed by SARS on October 26th, the tax regulator claims it is “the largest creditor of MTI by far”.
SARS is a preferent creditor, and consequently, it has the primary financial interest in the winding up of the MTI [sic].
To move things along, SARS has requested appointment of a co-liquidator.
An independant co-liquidator will be in a position to assess whether the enquiry proceedings … are justified and whether these proceedings are in any way beneficial to creditors and, in particular, to SARS.
It appears to no less than 7 commissions have been appointed to investigate the affairs of MTI and many witnesses have so far testified and that the record runs into many thousands of pages.
The legal costs must now be very substantial.
The continuation of the unrestricted enquiry proceedings simply erodes the free residue which might otherwise accrue to SARS.
It’s important to note that this isn’t some valiant attempt by SARS to maximize recovery for MTI’s victims.
As far as SARS are concerned, MTI, a $1+ billion Ponzi scheme the SA government never did anything about, owes them taxes on fraudulent activity.
In essence, the South African government is competing against Mirror Trading International’s victims. And the actual regulating authorities, namely the FSCA and Hawks (SA’s FBI equivalent), are letting it happen.
In response to SARS’ motion to intervene, liquidators issued a statement claiming “they owe (SARS) nothing”.
In a statement issued on Monday, MTI liquidators said after receiving a creditor claim of R931 million from Sars, they returned fire by submitting tax returns declaring zero tax liability.
“This is the first step by the liquidators to start the objection process against the claim submitted by Sars and excellent news to those who lost money after being scammed,” says the statement from the liquidators.
I’m not going to pretend to understand the significance of liquidators filing tax returns on behalf of MTI. I maintain that, as an alternative to South African authorities doing their job, the whole MTI liquidation process is a waste of time.
To really explain why I have two points to wrap up with.
Here’s the basis for MTI’s liquidators filing tax returns:
Explaining why MTI owes Sars nothing, the liquidators say bitcoin (BTC) deposited by several hundred thousand participants in the scheme was used as collateral for trading contracts for difference (CFDs), a type of derivative contract that tracks price movements in underlying assets, such as forex pairs.
These CFD price movements are usually amplified with leverage.
Mirror Trading International was a billion dollar Ponzi scheme. There was no trading going on.
Then there’s the October 23rd intervention of MTI owner and top net-winner Clynton Marks.
Marks is seeking to intervene in MTI liquidation proceedings on the basis he’s a shareholder.
Marks argues that liquidation proceedings should stop because of MTI’s terms and conditions.
There is a further primary reason why the intervention relief should be permitted and that is that the Applicants in the main application have misled the court by attaching the incorrect version of the MTI terms and conditions to the Founding Affidavit.
Does it matter? Mirror Trading International was a billion dollar Ponzi scheme. What MTI’s terms and conditions did or didn’t state is irrelevant.
To date South African authorities have made no arrests. The Marks crime family, primarily responsible for a billion dollars in consumer losses, remain at large – living openly on their ill-gotten gains in South Africa.
MTI CEO Johann Steynberg was arrested in Brazil in January 2022. He remains in extradition limbo.
Update 11th May 2023 – MTI’s Liquidators and SARS have settled the tax dispute for R283 million (~$14.9 million USD).