The latest crime report from the blockchain analysis firm Chainalysis named Mirror Trading International (MTI) the largest cryptocurrency fraud of 2020. Chainalysis came to this conclusion after an investigation found MTI raised $ 589 million from more than 471,000 deposits. According to the report, MTI’s reach is significantly higher than that of Forsage and J-enco, the next largest scams. Both scams grossed less than $ 350 million each.
More South African victims
In the report’s brief focus on MTI, Chainalysis shows that more than half of MTI web traffic came from South Africa. Canada, Mexico, the United Kingdom and the United States together account for nearly a quarter of the remaining web traffic. Using this web traffic data, the blockchain analysis firm concludes that “most MTI victims come from these countries in similar proportions”.
Separately, the blockchain analytics firm’s report also found that the BTC sent to MTI “mostly came from exchanges.” The so-called self-hosted wallets were also used. The report then describes how MTI used a popular gambling service to launder investor money. The report explains:
Perhaps most interesting of all is MTI Club’s obvious use of a popular cryptocurrency gambling service as a money laundering and withdrawal mechanism. The platform is MTI funds’ largest risky target by volume, having received $ 39 million worth of cryptocurrency from the scam in 2020.
As a venture capitalist, Dovey Wan, noted, this use of gambling platforms has become a “common money laundering technique” for many cybercriminals using cryptocurrency. This is because gambling platforms “can be used similarly to blenders to disguise the origin and flow of illegally obtained funds”.
How MTI lured its victims
As reported by news.Bitcoin.com, MTI managed to lure unsuspecting victims by promising constant daily returns of 0.5%. This rate of return would result in “annual profits of 500%”. On its website, MTI claimed that these high returns were guaranteed by “its AI-powered forex trading software”.
However, MTI’s unrealistic promises soon led to allegations of fraud. Initially, MTI executives denied allegations that they engaged in a tiered marketing fraud after regulators in the United States and South Africa pounced on the company. But at some point after the Financial Sector Conduct Authority (FSCA) raided the homes of some MTI executives, it was reported that investors were unable to withdraw their funds. With increasing pressure, CEO Johann Steynberg finally disappeared with investor money. This ultimately led to the collapse of MTI.
In the meantime, the Chainalysis crime report concludes that the MTI scam is a good example of “why the industry needs to make it known that algorithmic trading platforms that promise unrealistically high returns are almost always scams”. The report also states that cryptocurrency exchanges and other services “must discourage users from sending money to these addresses, or at least warn them that financial losses are very likely”.
Do you agree that MTI was the biggest scam in 2020? Let us know what you think in the comments section below.
Tags in this story
Bitcoin mixer, blockchain analysis, chain analysis, crypto-crime, cryptocurrency gambling service, FSCA, Johann Steynberg, Spiegelhandel, Mirror Trading International (MTI), money laundering, self-hosted wallets
Photo credit: Shutterstock, Pixabay, Wiki Commons, Chainalysis Criminal Report,
Disclaimer of liability: This article is for informational purposes only. It is not a direct offer or an invitation to make an offer to buy or sell, or a recommendation or approval of products, services or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author are directly or indirectly responsible for any damage or loss caused or allegedly caused by or in connection with the use or reliance on the content, goods or services referred to in this article.
