Crypto Casino Helps Launder $39m in $589m Scam

Mirror Trading International CEO Johann Steynberg disappeared with $589m of investors’ funds in what is the biggest crypto scam of 2020, says Chainalysis.

2020’s Biggest Cryptocurrency Scams and MTI

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).

Based on the report, MTI defrauded investors out of $589 million from across 471,000 deposits. Chainalysis used web traffic metrics to pinpoint certain aspects of how the scam unfolded. Looking at web traffic, the company was able to determine that half of that had come from South African IPs. In other words, it is very likely for the majority of victims to be from there.

Other countries affected were the United Kingdom, Canada and Mexico, which all contributed to a quarter of the remaining traffic. The victims from these countries were likely proportional to the web traffic analyzed by Chainalysis.

How Did the MTI Crypto Scam Start?

MTI opened as an investment service offering exaggerated returns to unwitting and trusting investors. Deposit at MTI, the company claimed, and you would receive a daily return of 0.5%. This amounts to over 500% return annually at a time when even the best platforms such as Blockfi offer no more than 4.5% APR annually.

Many felt for the ruse and soon, investors became fidgety requesting withdrawals. With no money to show for, investors soon called MTI a “scam,” which prompted the company to deny allegations, but it was already too late.

Investors had submitted petitions with regulators in both the United States and South Africa. As tension grew and investor funds seemed to be locked in the platform, the Financial Sector Conduct Authority (FSCA) in South Africa raided MTI executives’ homes and arrested suspects.

MTI CEO Johann Steynberg caught wind of what was happening and he disappeared with all of the investors’ funds, taking away the estimated $589 million.

Laundering Dirty Money at Crypto Casinos

Chainalysis spoke of an unnamed casino which MTI had used to launder investors’ funds. That made the money more difficult to trace. The report said that the company turned to a “popular gambling service,” before cashing it out.

Based on the analyst’s claims, the unnamed platform took in the biggest chunk of dirty funds MTI laundered online estimated at $39 million worth of cryptocurrency.