South Africa’s Primary Financial Regulator Proposes New Crypto Regulations In The Country

  • South Africa's financial regulator is looking to regulate cryptocurrencies and introduce laws to prosecute fraudsters in the industry following the uncovering of the “largest Ponzi scheme.”

Reports from Bloomberg confirms that South Africa’s primary financial regulator, Financial Sector Conduct Authority (FSCA), is planning to regulate cryptocurrencies such as Bitcoin, Ethereum, and Litecoin. The regulator is making proposals to oversee the cryptocurrency industry, prosecute fraudsters and “put people in jail,” the Head of enforcement at FSCA, Brandon Topham, said.

“At the point, something becomes a Ponzi scheme, we have lost our jurisdiction,” he said. “We need the police and the prosecuting authority to work fast and put people in jail.”

This follows the recent uncovering of a Ponzi scheme by a top Bitcoin trading desk, Mirror Trading International Ltd., said to have collected over 23,000 BTC (~$700 million) from its customers. In December, MTI, with over 260,000 customers on its books, was placed under ‘provisional liquidation’ as the customers rushed to withdraw their funds.

South Africa’s Mega-Million Bitcoin Scams

The rising demand for the world’s largest digital asset, Bitcoin, drives up the number of scam projects in the space. The MTI saga started in early 2020 when questions arose on whether the company was running a Ponzi. Then, the FSCA stated the company was not a Ponzi but rather lacked a crypto trading license.

After several investigations on the firm, the FSCA “found that the company kept neither accounting records nor a comprehensive register of participants, apart from 170,000 unique email addresses” recovered during a raid on the company in October. This led to more speculations of MTI running a Ponzi as MTI’s Chief Executive Officer Johann Steynberg fled into hiding – believed to be in Brazil.

In 2009, an alleged Bitcoin Ponzi ring involving over 800 investors across eight countries was stated to have stolen close to 12.5 billion rands (~$800 million) in a scam operation. According to Topham, such mega million scams are getting out of hand, who called for action against the MTI investors. He said,

“We need to make an example of MTI so that people understand that investing in a Ponzi is never a good idea.”

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