In a statement released on Tuesday afternoon, the regulator said it’s of the view that the company’s current business model requires it to have a financial service provider licence – which it does not have despite it being apparently aware of the need for one.

“MTI has informed us that they accept clients’ funds in the form of Bitcoin, pool the funds into one trading account on a forex derivate trading platform, and conduct high-frequency trading through the utilisation of a Bot. If this is being done as described, then this amounts to financial services, hence the licence requirement.”

“However, the FSCA has a much greater concern about the activities of the company. MTI claims to have more than R2.9 billion (at current conversion rates) in clients’ funds in trading accounts, but we have not been able to conclusively confirm that the funds exist.

MTI claims its Bot-trading can generate consistent profits averaging 10% per month. The FSCA believes this claimed return on the investments “seems far-fetched and unrealistic.”

The regulator is also concerned that FX Choice, MTI’s previous platform broker “seems to have made public statements that gainsay the version of MTI in terms of trading volumes and Bot trading.”

“FX Choice has blocked the account of MTI due to compliance concerns. We are in the process of obtaining confirmation from FX Choice of the correctness of the statements attributed to them.

The FSCA says its investigation is ongoing, and MTI has partially co-operated with it. “MTI has undertaken to inform all of its clients of the investigation and to provide the opportunity to all its clients to withdraw their assets that are with MTI.”

“We are reviewing the information as it becomes available and will involve the South African Police Service if the discrepancies are confirmed.

Moneyweb