MTI, allegedly South Africa’s home-bred virtual currency fraud, is expected to be the world’s largest virtual currency fraud in 2020, forcing regulatory agencies to take aggressive stance. Nevertheless, the drawback is that it is driving some of the best crypto companies out of the nation in search of safer places.
South Africa’s rapidly growing cryptocurrency platforms are now expanding to other crypto-friendly locations and financial centers, such as Singapore. Furthermore, the UK administration’s upbeat attitude toward cryptocurrencies is attracting virtual currency companies to the European country.
According to Bloomberg, high government intervention has pressured crypto platforms to relocate their headquarters to other safe places. Luno, South Africa’s largest crypto trading exchange, has already established an office in London, as well as an operations in Singapore.
Revix, a company based in Cape Town that specializes in selling digital coin packages, is relocating its headquarters to the United Kingdom. Revix Chief Executive Officer Sean Sanders stated in a discussion with Bloomberg:
South African authorities “have been incredibly slow in terms of regulation in the industry and that leads to businesses looking internationally. In an unregulated environment, a customer arrives at our platform with skepticism, and rightfully so. South Africa seems to go in the opposite direction of some of the more developed market pioneers and innovators in this space”.
The Tragic History of Pyramid and Ponzi Schemes in South Africa
Mirror Trading Investments (MIT) was revealed to be the largest virtual currency fraud of 2020, according to Chainalysis, in a downturning incident for the digital currency market. The fraud resulted in the loss of $1.2 billion in investor funds. Digital Currency Index’s CEO, Earle Loxton, stated:
“South Africa has a sad history of pyramid and Ponzi schemes and crypto was the obvious new format for this. Honest operators welcome regulation as it makes it possible for their clients to invest with confidence, especially at institutional level.”
At this point, it appears that regulatory agencies’ highest concern is to provide the highest level of security to buyers. Investors may find the plans frustrating, but the good news is that the sector and regulatory authorities are continuing to collaborate together on them.
Even South Africa’s top financial institutions have supported legislative attempts to create a structure for cryptocurrencies. However, the unpredictability of cryptocurrency laws is causing concern among platforms and investors.