A provisional liquidation order was issued by a judge in the liquidation case of the online bitcoin trading platform named Mirror Trading International, which had collapsed.
This order outlines the criteria that should be used for investor reimbursement. The order also reportedly instructs liquidators to designate bitcoin as an intangible asset in the same way as property.
Provisional order
Mirror Trading International (MTI) is a renowned bitcoin Ponzi scheme that collapsed. An order was recently granted by a judge in a South African High Court.
This outlined the criteria that should be used by liquidators for distributing the funds recovered to those who had invested in the scheme in question.
Furthermore, Justice MJ Dolamo, also stated that all investors of the MTI should submit their claims in the local currency i.e. the South African rand.
Reports also indicated that the provisional order issued by the judge also dictates liquidators to treat bitcoin in the same way as an ‘intangible asset’.
The report also said that the judge had taken into account two scenarios when he had issued the provisional order.
The first scenario
The first scenario had seen Justice Dolamo to regard MTI as an illegal Ponzi scheme, which means that all the agreements that were made between the defunct bitcoin trading platform and its investors or members were void.
A complex compensation method was devised under which the investors of MTI were divided into three different categories.
Liquidators were ordered by the judge to accept claims from all those investors who had made no returns at all.
The order from the judge also dictated that investors who have withdrawn less than what they invested should deduct their drawings, as this would help in calculating their claims.
As far as investors in the third category are concerned, the judge said that liquidators should take a look at all the transfers that were made to them by the company.
This includes the profits that were paid to them. Once funds have been recovered, investors belonging to this class would also be permitted to prove their claims from their initial investment in MTI, but not in terms of profits.
The second scenario
As far as the second scenario is concerned that sees MTI investors turn into creditors, the judge said that liquidators should consider investors in class two in terms of their returns.
As for those in class three, Justice Dolamo said that liquidators should target the initial investment as well as the profits.
MTI collapsed back in 2020 and since then, liquidators have been trying to recover the funds of investors from the masterminds of the Bitcoin Ponzi scheme.
There are also some investors who have thrown in a legal challenge because they are opposed to the Ponzi scheme’s liquidation.
As far as individuals who had defrauded MTI are concerned, the judge said that the liquidators would take action against these people.
The report said that those who object to this provisional order can give their reasons until October 31st.