Judge in MTI Liquidation Case Issues Order Designating Bitcoin as an Intangible Asset – Bitcoin Regulation News

A judge in the liquidation case of online bitcoin trading platform Mirror Trading International has issued an interim liquidation order that outlines the criteria to be used when paying back investors. The order would also have ordered the liquidators to treat bitcoin “as [an] intangible assets that constitute[s] property.”

Refund requests must be submitted in local currency

A South African High Court judge recently issued an order outlining the criteria that the liquidators of Mirror Trading International (MTI) – the collapsed Bitcoin Ponzi scheme – should use when distributing recovered funds to investors in the scheme. In addition, the judge, Judge MJ Dolamo, said MTI investors should submit claims denominated in the local currency – the rand.

According to a report by Mybroadband, the judge’s interim order requires liquidators to designate bitcoin as an “intangible asset” constituting property. The report also says the order offers two scenarios that the judge considered when making it. In the first scenario, Judge 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’s investors into three different categories, the judge ordered the liquidators to accept the investors’ claims with zero return. The judge’s order also states that investors whose withdrawals are less than their initial investment must deduct those withdrawals in order to determine the value of their claims.

Regarding investors in the category named Class 3, the judge’s order would have said:

Liquidators can sue Class 3 Investors for all transfers made to such investors by the company, including with respect to profit(s)…when and where circumstances permit.

When the funds are recovered, investors in this class will also be allowed to prove their claims arising from the original investment in MTI “but not in respect of profit”.

No claims for people who defrauded MTI

Meanwhile, in the second scenario in which MTI’s investors become creditors, Judge Dolamo said liquidators should go after Class 2 investors “with respect to returns.” For Class 3 investors, liquidators must tackle both initial investments and profits.

Following MTI’s collapse in late 2020, court-appointed liquidators attempted to recover investors’ funds from the masterminds of the Bitcoin Ponzi scheme. In turn, some investors opposed to MTI’s liquidation have launched legal action.

However, in his message to those accused of defrauding MTI, the judge ruled:

“They shall have no claim against the company arising out of such conduct and the liquidators are vested with a cause of action against such persons…to seek provision of such persons by the company, when and where circumstances permit. .”

According to the report, interested parties who object to the interim order being declared final will have the opportunity to give their reasons on October 31.

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Terence Zimwara

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

Image credits: Shutterstock, Pixabay, Wiki Commons

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