South African Authorities Want To Regulate Crypto Trading Due To Scams

South African authorities are now really focused on regulating crypto trading because of the increase in the number of scams that have been circling around on the market as we can see more in our latest crypto regulation news.

The South African authorities are seeking more control over crypto trading after the collapse of the biggest Ponzi Scheme in the country. Alleged BTC trading company Mirror Trading International was placed on provisional liquidation as investors tried and failed to withdraw their funds. the company claimed to have more than 260,000 memberships across the world and said that it handles about 23,000 BTC which is a sum worth $716 million.

The investigation by the Financial Sector Conduct Authority revealed that the company kept no accounting records or databases and the management claimed to have been misled by CEO Johann Steynberg who reportedly fled to Brazil. The lawyers for the company stressed that the FSCA hasn’t ascertained yet that MTI was operating as a Ponzi Scheme but only that it was trading without a license. The FSCA’s head of enforcement Brandon Topham said that prosecuting the authorities had to be able to stop these schemes before they gathered more momentum:

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

To that end, the South African authorities are making new proposals to regulate the trading of cryptocurrencies like BTC as Topham said. He continued that to get in early on Ponzi schemes became fairly common practice in South Africa:

 “I have been on radio shows where people say, ‘I am a professional Ponzi investor. You get in quick and get out and like with any business you have to risk money to make money.’ We need to make an example of MTI so that people understand that investing in a Ponzi is never a good idea.”

In July, the Texas State Securities Board closed all MTI operations that happened in its jurisdiction as it concluded that the project was a multi-level marketing scheme. South Africa’s regulators were already suspicious of the claims that it would return 10% of the profits per month each year. Topham said it will launch a serious investigation to see how much was involved. Liquidators failed to trace the company’s assets and are expected to be granted final liquidation order assuming legal proceedings are unopposed.

While the governments are considering crypto regulation for the past few years now, they are being pushed into concrete laws because of the rise of BTC and other cryptocurrencies. Coinbase CEO Brian Armstrong said that the US Treasury Department is now proposing laws that will see exchanges requiring names and addresses for users involved in crypto transactions that surpass $3000.