FSCA suspends trading platform’s license for unrealistic return promises in South Africa
On Thursday, October 17, the Financial Sector Conduct Authority (FSCA) announced that it has temporarily taken away Banxso’s license. This South African online trading platform was found to be making promises of unrealistic returns to its users.
The FSCA’s decision came after an initial investigation revealed concerns about Banxso’s activities and its possible links to misleading advertisements featuring famous people like Elon Musk, Johann Rupert, and Nicky Oppenheimer. In a statement made in April 2024, the FSCA informed the public that it was looking into “potential violations of financial sector laws by Banxso.”
Many investors who clicked on these deepfake ads reported losing large amounts of money. The FSCA explained that its action was necessary because there was a risk of harm to clients and the general public if Banxso continued operating.
“The FSCA is concerned about the aggressive sales techniques used by Banxso agents, promises of unrealistic returns, and the lack of proper risk assessments before selling financial products to clients,” the authority said.
The FSCA stated that once the investigation is complete, it will review the findings and any arguments presented by Banxso. The platform has the opportunity to explain why the provisional withdrawal should be lifted.
In addition, the FSCA reported the situation to the Financial Intelligence Centre (FIC), which stepped in on October 2, 2024, to freeze seven of Banxso’s bank accounts under a specific financial law. However, when Banxso sought to lift this freeze on October 4, 2024, the Western Cape High Court denied the request, keeping the freeze in place.
The FSCA also informed the National Prosecuting Authority’s Asset Forfeiture Unit, which successfully requested a preservation order for the frozen funds on October 14, 2024, under a law aimed at preventing organized crime.
Earlier in January 2024, the FSCA had warned the public to be cautious with certain investment opportunities, highlighting companies like Livestock Wealth Financial Services (Pty) Ltd and its parent company, Livestock Wealth (Pty) Ltd, which are part of an agri-investment startup.
