There is good news and bad news for investors when it comes to the failed Bitcoin scam, Mirror Trading International (MTI).
First, the bad news. Investors who withdraw their Bitcoin, whether in full or in part of their initial investment, within six months of MTI liquidation must repay the Bitcoin. If you do not have Bitcoin, you will be asked to repay the amount equivalent to the Bitcoin you withdrew at the current price.
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This week, Moneyweb reported on the case of Ben Janse van Vuuren, an MTI member who invested R20,000 in the scheme in July 2020 and asked for a refund as he suspected he may have been involved in fraud. Ta. He received approximately R21,000 in October 2020, just months before MTI collapsed in December 2020. He clearly thought he had dodged a bullet.
Read: Liquidator demands R97,000 from MTI investor who thought he dodged a bullet
In December, Janse van Vuuren was informed that he would have to repay the approximately 0.13 Bitcoin he withdrew in 2020 at today's price of R97,000. This seemed very unfair, so we wrote to MTI's liquidators asking what was going on. Initially, MTI said Janse van Vuuren would have to repay the Bitcoin (or Rand equivalent), but the initial deposit would be R20,000, which was the then-value, not the current value, to MTI Real Estate. He hinted that he could file a claim against him. R97,000.
Well, good news
MTI's liquidators then said Janse van Vuuren must return 0.13 Bitcoin, or the current Rand equivalent of R97 000, but not the R20 000 previously reported to the estate. Instead, he clarified that he was entitled to claim the full amount of R97,000. .
“It is important to note that the aforementioned claims on the estate are concurrent claims, meaning that Mr. Janse van Vuuren will receive a pro rata dividend in respect of that claim, calculated as a percentage of his claim. 'All investors who have proven their claims against MTI,' said Herman Bester, one of MTI's liquidators.
This does not mean that Mr Janse van Vuuren will automatically recover the R97,000 as his claim will be pooled together with other concurrent claims on the property. They receive a pro rata share of what remains in the pot after the costs incurred in the liquidation process are paid.
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Only 10,000 MTI members are eligible to receive payments
Mr Bester said MTI was declared an illegal Ponzi scheme in the Western Cape High Court last year, giving liquidators powers under sections 26 and 32 of the Insolvency Act to demand repayment of withdrawals from MTI. He explained that This means that any agreement between the company and its investors was void from the beginning.
Therefore, withdrawals from MTI are considered “worthless disposals” from the perspective of bankruptcy law and must be repaid.
This also means that investors who are required to return their capital under Article 29 of the Bankruptcy Code are entitled to make a claim for the capital losses they have suffered.
“The effects of Section 29 of the Bankruptcy Code are often viewed by innocent investors as extremely harsh and unreasonable,” says Bester.
“However, the reason these claims were created in the Bankruptcy Code is based on equity by restoring equity among investors who have lost capital invested in MTI and have not withdrawn their capital in the past six years. It is important to note that investors who exited MTI several months before liquidation and those who were lucky to exit within six months of liquidation. ”
Mr. Bester said that while investors who need to return what they received will obviously find this relief extremely unfair, investors who don't make a withdrawal and lose everything “I'm sure they would agree that it would be fair” for the money to be returned and shared in an equal manner, he said. It will be distributed pro rata to all investors who lost their initial investment.
“This is exactly what Section 29 of the Bankruptcy Code seeks to achieve.”
What if the asset was a car instead of Bitcoin…
Bester uses the example of a transfer from a bankrupt company and then going into liquidation to illustrate the concept. The liquidator only has the right to recover the vehicle. If the investor is no longer in a position to return the vehicle, the liquidator will be entitled to recover the value of the vehicle at the higher of the date it was transferred to the investor or the date the court entered the judgment. It will be. order.
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For vehicles that generally lose value over time, the highest value is usually the value of the vehicle at the time it is transferred to the investor, not the date after the court makes the order. The value of the car would have obviously decreased over time.
In MTI's case, the withdrawn bitcoins have more than quadrupled in value since liquidation, and investors may be struggling to find the funds to pay off the property.
opposite opinion
Lawyers representing MTI investors responded to a Moneyweb article this week by challenging the idea that withdrawals from the scheme amount to worthless disposals (and therefore must be repaid).
“To my knowledge, there has not yet been a court decision in which a court has determined that these investments are dispositions under bankruptcy law,” the lawyer says.
“Of course, it is important that the liquidators treat these claims as dispositions, otherwise all the claims would have already been stipulated. Apparently they are jumping the gun right now.
“It is also of great concern that the liquidator is attempting to demand far more from investors than they have previously invested.”
prescription
Several MTI investors have raised the issue of statute of limitations, and if the statute of limitations is not interrupted, the debt will expire. This is covered by statutes of limitations, meaning that most debts become “prescription” or expire within three years unless, for example, the debtor admits the debt or the creditor issues a summons. To do.
MTI entered provisional liquidation in December 2020, and the statute of limitations was supposed to end in December 2023.
Bester says things aren't that simple because the law says the statute of limitations begins on the day MTI recognizes the debt.
In this case, MTI's statute of limitations period would end in June or July 2024, a three-year period after liquidators have had sufficient time to investigate the company's finances.
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