MTI investors dig in over demands they repay bitcoin at today’s prices

It’s become clear that the Insolvency Act, first drafted in 1935, never anticipated a case such as that of Mirror Trading International (MTI).

More specifically, it never anticipated a digital asset like bitcoin that would appreciate by hundreds of percent a year.



Liquidators for the insolvent estate of MTI, the bitcoin Ponzi scheme that came crashing down in 2020, have sent out thousands of letters of demand to investors who withdrew funds from the scheme, demanding they repay either the bitcoin or the rand equivalent – but at today’s prices.

Read: Good news and bad news for MTI investors

When challenged on this interpretation of the Insolvency Act by attorneys Lister & Co, the Master of the Cape High Court agreed with the liquidators.

“We respectfully do not share this view,” responds attorney John Lister, who is representing more than 400 MTI investors who have received letters demanding repayment of bitcoin.

“Be that as it may, the application of Section 32(3) by the liquidators in relation to claiming bitcoin or the higher value of bitcoin (which is currently valued at R1.4 million as opposed to the average value of R200 000 when it was withdrawn) is causing massive resistance and resentment to such claims amongst investors who innocently invested in MTI and who believe they are being unfairly penalised.”

Investors at risk of bankruptcy

Lister cites one example of a client who is prepared to pay in the rand value of bitcoin when it was withdrawn in an amount of R57 000. Instead, the liquidators demanded he repay the bitcoin at today’s price of R310 000.

Moneyweb reported on the case of Ben Janse van Vuuren, who invested R20 000 in MTI in July 2020 but withdrew his funds, then worth R21 000, a few months later when he suspected he might be involved in a scam. He has now been asked to repay the 0.13 bitcoin he withdrew at the current price of R97 000.

If this reading of the Insolvency Act is allowed to stand, it means many MTI investors are at risk of bankruptcy, says Lister.


Liquidators claim R97 000 from MTI investor who thought he’d dodged a bullet

MTI investors fight back against liquidators’ demands for repayment

“This clearly demonstrates that the section 32(3) [of the Insolvency Act] shoe does not fit when it comes to bitcoin. When the Insolvency Act was promulgated in 1935, an intangible, volatile digital … currency [like] bitcoin was not around at the time and not in the eye on the beholder (the legislature),” adds Lister.

Lister and his clients are relying on a 2023 judgment in the Cape High Court by Acting Judge Alan Maher, who issued a directive that any MTI member who withdrew less than they invested would have to account to the liquidators for any returns received, and any benefit received would reduce the size of their claim against MTI.

Their investments should be calculated in rands on the date of investment and the date of withdrawal.

In Ben Janse van Vuuren’s case, this means he would have to repay R21 000 (and still be able to make a claim against the MTI estate) rather than the R97 000 demanded by the liquidators.

The Master of the Cape High Court agrees with the liquidators that Lister’s reliance on the Maher judgment is wrong and that the liquidators are not bound by it.

Demand is ‘for the benefit of the body of creditors’



In a letter to the Master, the liquidators say Lister failed to consider other parts of the Maher judgment “where the judge explicitly states his understanding that the relief sought through directions is not intended to be final and binding, nor does it limit any party’s rights (including the liquidators)”.


However, the liquidators say they appreciate the predicament of investors who no longer have the bitcoin received from MTI.

“Whilst it is understandable that they may deem the provisions of the Insolvency Act to be unreasonable and unimaginable in the present circumstances, these very same investors would no doubt have been quite prepared to, in the event of a substantial drop in the value of bitcoin, buy bitcoin at a reduced price and restore same to the liquidators.”

The demand for repayment of bitcoin is for the benefit of the body of creditors, even if this seems harsh, unjust, unreasonable and unimaginable to them, say the liquidators.

Settlement possible based on individual circumstances

The liquidators say they have developed guidelines to assist in the settlement of claims for less than the amount demanded. This will require disclosure of the investor’s financial means on a without-prejudice basis.

“A pro forma/template sworn affidavit has been compiled, which a defendant is required to complete, in order for the liquidators to be in a position to have regard to a defendant’s financial position, as one of the important factors which forms part of the consideration of a settlement offer.”

Lister says asking investors to make a financial means affidavit misses the point:

“It’s not about affordability. It’s about the fact that there is a defence to such demands, and asking for disclosure about private financial information under these circumstances is unacceptable.”

Furthermore, the Maher judgment provided sensible guidelines, which the liquidators are ignoring. 

“This is causing unnecessary delays in the administration of the estate and unnecessary litigation at great cost to the estate and investors, and it is a pity that the liquidators do not accept that it is their duty to simply blindly follow section 32(3) particularly when it is common cause that at this time insolvency of MTI has not been proven,” adds Lister.

“It is important to note however that the master’s dismissal of the complaint is not a finding that section 32(3) must be applied in relation to bitcoin. On the contrary this will now no doubt be a primary issue before the courts in due course.”

William Murphy

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