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South Africa’s FSCA investigates cryptocurrency investment firm Mirror Trading International

South Africa's financial regulator starts investigations into cryptocurrency firm MTI for operating without the proper license requirements.

Image by: South African Tourism / Flickr

Sun, 23 Aug 2020, 07:25 am UTC

Financial Sector Conduct Authority (FSCA), South Africa’s financial regulator, announced that it is investigating the cryptocurrency investing firm Mirror Trading International. This comes after the Texas State Securities Board (TSSB) issued a cease and desist order to the firm last July.

The reason for FSCA’s investigation on Mirror Trading International (MTI) is that “the current MTI business model requires it to be in possession of a financial service provider license,” according to ” Similarly, TSSB accused MTI of operating in Texas without the necessary approvals or licenses.

“The FSCA is investigating the activities of Mirror Trading International,” South Africa’s regulator said in a press release. “The FSCA is of the view that the current business model of Mirror Trading International requires it to be in possession of a financial service provider license.”

“MTI has informed us that they accept clients’ funds in the form of Bitcoin, pool the funds into one trading account on a forex derivative trading platform, and conduct high-frequency trading through the utilisation of a Bot,” FSCA added. “If this is being done as described, then this amounts to financial services, hence the licence requirement.”

However, one of the FSCA’s biggest concerns is that the company promised as high as 10 percent per month returns to its clients, which the regulator deemed to be unrealistic, according to Cointelegraph. In addition, the FSCA is also concerned if the 2.9 billion South African Rand or around $168 million client funds that MTI claims to be in trading accounts really exist.

“However, the FSCA has a much greater concern about the activities of the company,” the FSCA said. “MTI claims to have more than R2.9 billion (at current conversion rates) in clients’ funds in trading accounts, but we have not been able to conclusively confirm that the funds exist.”

The investigation is still ongoing as FSCA noted that MTI has “partially cooperated with the agency.” Meanwhile, the South African regulator recommended to clients to pull out their funds from the investment firm.

“MTI has undertaken to inform all of its clients of the investigation and to provide the opportunity to all its clients to withdraw their assets that are with MTI,” the FSCA added. “We recommend that clients request refunds into their own accounts as soon as possible.”

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