The Financial Sector Conduct Authority (FSCA), a South African regulator has communicated to significant entities behind Mirror Trading International (MTI) that it aims to enforce a fine of $7 million versus the now-inactive crypto investment company.
Infringement of Financial Sector Law
According to a letter dated July 6, which has also been transmitted to the Chief Executive Officer and other people in the managerial team, the regulator stated it’s intention to sanction the company comes from MTI’s participation in activities that it branded as “contravened a financial sector law.”
The exposure of the confidential letter to the South African media happened just few days after the issuance of a final liquidation order against MTI by a court.
As well, as formerly reported by Bitcoin.com News, the letter is served a few months earlier the court try submissions from liquidators who have the intention to contend in favour of declaring MTI a ponzi scheme.
In the meantime, the FSCA also explicates how executives of MTI – Johann Steynberg, the CEO and Cheri Marks specifically – employed deception to carry out the ponzi scheme before it eventually disentangled in December 2020.
It disclose the several provisions of South Africa financial sector law which MTI questionably breached starting in April 2019.
For Example, the letter implied that MTI’s debut violation happened when “trading was conducted in derivative instruments based on forex pairs, through a platform broker named FX Choice.”
With regard to this trading, the FSCA affirmed that MTI was “not in possession of a financial services provider licence as contemplated in section 8 of the Financial Advisory & Intermediary Services Act 37 of 2002 (FAIS Act).”
The regulator as well stated further:
“As this was done without a license, MTI was also in contravention of section 111 of the Financial Sector Regulation Act 9 of 2017 (FSR Act).”
Likewise, the regulator aver that through the time between August 2019 to October 2020, MTI infringed the same section of the FSR Act subsequently to Steynberg claiming that the company had “employed a bot together with a head trader and trading decisions. “
In the meantime, in what is called the third period by the FSCA – From October 2020 through to December 2020- MTI asserted it had “changed its trading activities to trade in derivative instruments based on bitcoin.”
In agreement with MTI, it meant “it no longer required an FSP licence.” Nevertheless, the FSCA took a firm stand that this was contrary as Steynberg’s personal submissions to the regulator implied a different thing.
The FSCA stated:
“It is not correct as the submissions received from Steynberg revealed that the crypto assets were alleged to be traded in the form of a derivative product, which means MTI still required a licence from the Authority.
It also means that MTI and its senior management was still contravening section 7(1) of the FAIS Act.”
Meanwhile, the letter disclosed that bodies in MTI’s managerial team will be granted the chance to raise notions on the investigation report and also on the intended administrative sanction.
Notwithstanding, if no notions are received by end of of business on 6th of August, 2021, the FSCA “may proceed with the proposed enforcement and regulatory action ” the letter stated.