Judge in MTI Liquidation Case Issues Order Designating Bitcoin an Intangible Asset – Regulation Bitcoin News
A judge in collapsed online bitcoin trading platform Mirror Trading International’s liquidation case has issued a preliminary liquidation order outlining the criteria to be used in refunding investors. The order also directs the liquidators to consider bitcoin “as [an] intangible asset that constitutes[s] property.”
Claims for reimbursement must be sent in local currency
A South African High Court judge recently issued an order outlining the criteria that liquidators of Mirror Trading International (MTI) – the collapsed bitcoin Ponzi scheme – should use when distributing recovered funds to the scheme’s investors. In addition, the judge, Justice MJ Dolamo, said that MTI investors should submit claims denominated in the local currency – the rand.
According to a Mybroadband report, the judge’s preliminary order requires liquidators to designate bitcoin as an “intangible asset” that constitutes property. The report also said the order provides two scenarios the judge looked at when issuing it. Under the first scenario, Justice Dolamo assumes that MTI was an illegal scheme, therefore 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 instructed liquidators to accept claims from investors with zero returns. The judge’s ruling also states that investors whose withdrawals are less than their original investment must deduct such withdrawals so that the value of their claim is determined.
Regarding investors in the category called Class 3, the judge’s order reportedly said:
The liquidators may pursue Class 3 investors in respect of any transfers made to those investors by the company, including in respect of profit(s)… when and where circumstances permit.
Once the funds are recovered, investors in this class will also be allowed to prove their claims stemming from the original investment in MTI “but not with respect to profits.”
No requirements for individuals who have defrauded MTI
Meanwhile, under the second scenario where MTI investors become creditors, Justice Dolamo said liquidators should go after the Class 2 investors “with regard to the returns.” For Class 3 investors, liquidators should go after both the initial investments and the profits.
Following the collapse of MTI in late 2020, court-appointed liquidators have attempted to recover investor funds from the bitcoin Ponzi scheme’s masterminds. For their part, some investors opposed to MTI’s liquidation have raised a legal challenge.
But in his message to individuals accused of defrauding MTI, the judge ruled:
“They will have no claim against the company arising from such conduct and the liquidators have a case against those persons … to recover dispositions to those persons from the company, when and where the circumstances permit.”
According to the report, interested parties objecting to having the preliminary ruling declared final will have an opportunity to state their reasons on October 31.
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