Blockchain analysis company, Chainalysis, has named Mirror Trading International (MTI) as 2020’s biggest scam, according to their 2021 Crypto Crime Report. The South African-based crypto ponzi scheme raked in $589 million worth of cryptocurrency across more than 471,000 deposits.
The report takes a deep dive into 2020’s biggest investment scam, describing MTI as a passive income source that, according to its website at the time, promised to grow its customers’ Bitcoin through Algorithmic trading. Of course, the MTI website is no longer in operation, as at the time of writing. The company’s website went on to promise consistent daily returns of 0.5%, translating to nearly impossible yearly gains of around 500%. Chainalysis notes that Algorithmic trading is becoming a common premise for many crypto investment scams.
More than half of MTI’s web traffic originated from South Africa, as the company had offices in Stellenbosch and Johannesburg. The US, UK, Canada, and Mexico, however, also made up significant portions of MTI’s web traffic. It can therefore be assumed that most MTI victims come from these countries in similar proportions.
Chainalysis notes that MTI received $588 million worth of Bitcoin from more than 470,000 transactions, mainly from exchanges, but also from self-hosted wallets. What is, however, most interesting, is the company’s apparent usage of a popular cryptocurrency gambling service as a money laundering and cash out mechanism. The gambling service is regarded as the most risky destination of MTI funds by volume, receiving $39 million worth of crypto from the ponzi scheme in 2020.
The report makes special mention that cryptocurrency observer and venture capitalist, Dovey Wan, has argued that it is becoming a common trend for cybercriminals to launder their crypto through gambling platforms, because they can be used in the same manner as ‘mixers’ to obscure the origins and flows of illicitly-obtained funds.
“Mirror Trading International is another example of why the industry must spread the word that algorithmic trading platforms promising unrealistically high returns are nearly always scams”.
Chainalysis makes an incredibly valid point by suggesting that crypto exchanges and other services, when made aware of these scams and receive their crypto addresses, should discourage users from sending funds to those addresses or, at least, flag the address and provide warning to them that financial losses are highly likely.