Chainalysis has issued its annual report targeting the biggest scams in the crypto and blockchain industry. The report covers 2020 and names three scams, with the largest involving Mirror Trading International (MTI).
MTI defrauded investors out of $589 million from across 471,000 deposits, based on the report. To determine certain aspects of how the scam unfolded, Chainalysis used web traffic metrics. The company was able to decide on, looking at web traffic, that half of South African IPs came from. In other words, the majority of victims are more likely to be from there.
The United Kingdom, Canada, and Mexico were the other countries affected, contributing to a quarter of the remaining traffic. It is possible that the victims from these countries were proportional to the web traffic analyzed by Chainalysis.
MTI began as an investment service offering unwitting and trusting investors with exaggerated returns. Deposit at MTI, the company said, and you will earn a 0.5 percent daily return. This amounts to over 500 percent return annually at a time when no more than 4.5 percent APR is provided annually by even the best platforms like Blockfi.
Many felt the ruse, and investors soon became fidgety requesting withdrawals. Investors soon called MTI a “scam,” with no money to show for, which prompted the company to deny allegations, but it was already too late.
Investors in both the United States and South Africa have filed petitions with regulators. The Financial Sector Conduct Authority (FSCA) in South Africa raided MTI executives’ homes and arrested suspects as tension increased and investor funds seemed to be locked in the platform.
Johann Steynberg, CEO of MTI, caught wind of what was happening, and he disappeared, taking away the estimated $589 million with all the investor funds.
Chainalysis spoke to an unspecified casino that had been used by MTI to launder funds from investors. That made it harder to track the money. The report said that the company turned to a “popular gambling service,” before cashing it out.
The unnamed platform took in the largest chunk of dirty funds MTI laundered online, estimated at $39 million in cryptocurrency value, based on the analyst’s claims.