South African regulator wants Mirror Trading International to pay millions as a penalty for violating the financial sector law – regulating Bitcoin News

A South African regulator, the Financial Sector Conduct Authority (FSCA), has informed key figures at Mirror Trading International (MTI) that it intends to fine the now-defunct crypto-investment company a $ 7 million fine.

Violation of financial sector law

According to a July 6 letter also sent to the CEO and other members of the management team, the regulator says their proposal to fine the company is due to MTI’s involvement in activities of which they are says they are “breaking a law in the financial sector”.

The confidential letter emerged and leaked to the South African media just days after a court issued a final liquidation order against MTI. As previously reported by Bitcoin.com News, the letter comes a few months before the court hears applications from liquidators who want MTI to declare a Ponzi scheme.

Meanwhile, the FSCA letter also explains how MTI executives – notably Johann Steynberg, the CEO, and Cheri Marks – used misrepresentations to maintain the Ponzi scheme before it was finally exposed in December 2020. It reveals the various provisions of the South African financial sector law that were allegedly violated by MTI as of April 2019.

For example, the letter suggests that MTI’s first breach occurred when “trading in derivative instruments based on forex pairs was conducted through a platform broker called FX Choice.” In relation to this trade, the FSCA claims that MTI was “not licensed as a financial services provider within the meaning of Section 8 of the Financial Advisory & Intermediary Services Act 37 of 2002 (FAIS Act)”. The regulator also added:

Since this was done without a license, MTI also violated Section 111 of the Financial Sector Regulation Act 9 of 2017 (FSR law).

MTI misrepresentations

Similarly, the regulator claims that MTI violated the same section of FSR law between August 2019 and October 2020 after Steynberg claimed the company “used a bot along with a main dealer and a trading team to sell all of its To make trading decisions ”. . “

In the period designated by the FSCA as the third period – October 2020 to December 2020 – MTI claimed it had “changed its trading activities to trade bitcoin-based derivative instruments”. According to MTI, this means “that an FSP license is no longer required”. However, the FSCA insists that this was not the case, as Steynberg’s own submissions to the regulatory authority suggest otherwise. The FSCA said:

This is not correct, as the information received from Steynberg showed that the crypto assets were allegedly traded in the form of a derivative product, which means that MTI still required a license from the authority. It also means that MTI and its management are still violating Section 7 (1) of the FAIS Act.

In the meantime, it appears from the letter that members of the MTI management team will be given the opportunity to comment on the investigation report and the proposed administrative fine. However, if no such filings are received by the close of business on August 6, 2021, the FSCA may “proceed with proposed enforcement and regulatory measures,” the letter stated.

What do you think of the FSCA’s proposal to fine the now defunct MTI with a $ 7 million fine? Let us know what you think in the comments below.

Photo credits: Shutterstock, Pixabay, Wiki Commons

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