Mirror Trading International (MTI) is one of the most well-known bitcoin Ponzi schemes that collapsed and now there is a new twist in the saga. The liquidators of the scheme received a request from the South African Revenue Services (SARS) and the revenue collector has demanded a whopping $55.3 million in taxes. Moreover, the collector specified that the liquidators settle the tax payment bill before the completion of the MTI liquidation process.
SARS demands taxes
Reports indicate that the South African revenue collector launched a claim concerning two tax periods with the Master of Cape Town High Court. The claim is close to $55 million and was brought against Ponzi scheme Mirror Trading International (MTI), which has now become defunct. The tax periods are 2019 and 2020.
The South African Revenue Service (SARS) asserted that it wants the tax bill to be paid before the liquidation process of the Ponzi scheme is over. The bitcoins that MTI owned had been recovered from FX Choice, a forex trader, and their sale had generated a sum of $75 million. SARS said that the liquidators of the collapsed company were not carrying out their duties properly, the way they should as public offers.
The revenue collector said that if they find any additional Bitcoins that belong to MTI, it would have the right to make adjustments to its claim as well.
Problems with liquidators
The revenue collector shared the complaints it had with the liquidators in the filings that were made to the Master of High Court. SARS said that the liquidators were providing information late and they had also not disclosed income worth $10.8 million, which had been realized in 2020, and $398 million which had been realized in 2021.
SARS has demanded that the liquidators pay the revenue collector $55.3 million. This figure includes $20.8 million which is the regular income tax charged, while the remaining $34.5 million that it has demanded from liquidators is for understating income.
Preferential creditor status
Johan Matthews presented evidence on behalf of the revenue collector. He is part of the Illicit Economy Unit and he also presented the argument that in accordance with the Insolvency Act, they should give SARS preferential creditor status. If this status is granted, then liquidators will not be able to disburse the funds recovered from the Ponzi scheme until the claims of the revenue collector have been fully paid.
SARS also asserted that unless the MTI liquidators submit a return within 40 days of assessment, they will not be able to appeal or object. The revenue collector also disclosed why they had decided not to wait for the liquidation process to end.
The tax collector said that once MTI is liquidated fully and the liquidators start disbursing dividends to its creditors, there is a possibility that they may not be left with enough funds to pay the full amount owed to the taxpayer. Thus, this would mean that the recovery of tax would be difficult.