Judge in MTI Liquidation Case Orders Designating Bitcoin as Intangible Asset – Bitcoin News Regulatory

Judge in MTI Liquidation Case Orders Designating Bitcoin as Intangible Asset – Bitcoin News Regulatory

A judge in the liquidation case of collapsed bitcoin trading platform Mirror Trading International has issued a provisional liquidation order outlining the criteria to be used when compensating investors. Reportedly, the order directs liquidators to consider Bitcoin “as… [an] Intangible assets that constitute[s] its origin.”

Compensation claims must be submitted in local currency

A South African High Court judge recently issued an order outlining the criteria that liquidators at Mirror Trading International (MTI) – a collapsed Bitcoin Ponzi scheme – must use when distributing cash back to the scheme’s investors. In addition, the judge, Judge MJ Dulamo, said that MTI investors must submit claims denominated in the local currency – the rand.

According to Mybroadband ReportThe judge’s temporary order requires liquidators to designate bitcoin as an “intangible asset” that constitutes ownership. The report also stated that the order presented two scenarios that the judge considered when issuing it. Under the first scenario, Judge Dolamo assumes that MTI was an illegal scheme, thus all agreements between members/investors and the defunct Bitcoin trading platform were void.

Using a complex compensation method that divides MTI investors into three different categories, the judge directed liquidators to accept claims from investors without returns. The judge’s order also states that investors whose withdrawals are less than their initial investment need to deduct such fees so that the value of their claims is determined.

Regarding investors in the so-called Class 3, the judge’s order is reported to have said:

Liquidators may pursue Class 3 investors with respect to all transfers made by the Company to such investors, including in respect of dividends (dividends)…when and where circumstances permit.

When the funds are redeemed, investors in this category will also be allowed to substantiate their claims arising from the initial investment in MTI “but not with respect to profit”.

No claims for individuals who defrauded MTI

Meanwhile, under the second scenario in which MTI investors become creditors, Judge Dulamo said liquidators should go after Class II investors “with respect to proceeds.” For Tier 3 investors, liquidators must keep track of both initial investments and dividends.

After the collapse of MTI in late 2020, court-appointed liquidators were trying to recover investor funds from the masterminds of the Bitcoin Ponzi scheme. In turn, some investors opposed to the liquidation of MTI filed a lawsuit.

However, in his letter to individuals accused of defrauding MTI, the judge ruled:

“They will have no claims against the Company arising from such conduct and liquidators have reason to sue these individuals … to restore the dispositions of these individuals by the Company, when and where circumstances permit.”

According to the report, interested parties who object to declaring the temporary order final will have an opportunity to state their reasons on October 31.

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Terence Zimoara

Terence Zimoara is a Zimbabwean award-winning journalist, author and writer. He has written extensively about the economic problems of some African countries as well as how digital currencies can provide Africans with an escape route.

photo credits: Shutterstock, Pixabay, Wikicommons

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