Banxso agents allegedly mislead clients on licence status

After the Western Cape High Court lifted the preservation order on Banxso’s bank accounts, agents of the controversial trading platform have allegedly informed clients that the company’s financial services provider (FSP) licence has been reinstated — despite no such announcement from the Financial Sector Conduct Authority (FSCA).

Both Moneyweb and the attorney leading a liquidation application against Banxso have received complaints from clients who claim they were misled into believing that trading and deposits could resume as usual.

Meanwhile, Banxso’s trading platform remains active, even though the FSCA provisionally withdrew its licence in mid-October.

Two Banxso clients contacted Moneyweb shortly after the Western Cape High Court lifted a preservation order on Banxso’s bank accounts on Friday. They claimed Banxso agents phoned them and said the licence was reinstated, and they could continue to trade and deposit funds into their accounts.

Moneyweb completed a contract for difference trade on the Banxso platform on Friday afternoon, proving it remains live.

ALSO READ: Banxso continues to take money despite banks freezing its accounts

The FSCA provisionally withdrew Banxso’s licence on 16 October and hasn’t announced that it has been reinstated. Therefore, it is not allowed to offer trading services to clients.

Pierre du Toit of Mostert & Bosman Attorneys, the attorney leading a liquidation application against Banxso, also confirmed to Moneyweb that his clients were approached in a similar way.

“It is most concerning that a number of our clients have been approached by Banxso agents shortly after the discharge of the preservation order, advising clients that Banxso’s financial services provider licence has now been reinstated and that they can further assist clients with trading.  This is a blatant fraudulent misrepresentation,” he said.

Moneyweb sent questions to Hendrik Theron of Hanekom Attorneys, representing Banxso, but he hadn’t responded by the time of publication. (Banxso did, however, issue a statement after the article was published, but it does not address the claims that its agents told clients that the licence was reinstated. The statement appears below this article.)

ALSO READ: WATCH: Banxso defies licence suspension

Preservation order

The Western Cape High Court’s reversal of the preservation order follows the FIC instructing Nedbank, Standard Bank and Capitec early in October to freeze Banxso’s bank accounts. It later stated in court papers that it believed Banxso to be a “criminal enterprise”.

The Asset Forfeiture Unit (AFU) later obtained a preservation order for the remaining monies in the accounts, as the FIC directive was only valid for a period of ten days. However, the court set aside the order on Friday morning without providing reasons for the ruling.

Moneyweb has sent questions to the AFU and the FIC but has not received a response.

However, Du Toit stated that Banxso’s application was based on a technical and procedural flaw in the National Director of Public Prosecution’s ex parte application for the preservation order.

“This flaw can be described as material non-disclosure of all relevant facts, which is the responsibility of the applicant in an ex parte application,” he said.

The non-disclosure purportedly relates to the NDPP not informing the court that Banxso repaid R14 million to clients who claimed they were duped by the fake advertising featuring celebrity billionaires such as Johann Rupert and Elon Musk on social media.

ALSO READ: The FIC busts Banxso

However, it seems that many more individuals were duped by the fake ads and redirected to Banxso, where they were onboarded as clients. A total of 260 such victims have contacted Moneyweb and claimed the fake ads tricked them and that they lost more than a collective R160 million on the Banxso platform.

Du Toit also stated that 150 clients with claims totalling R181 million have registered as creditors in the liquidation application, which will be heard on 4 December.

He added that eight of his clients “invested pursuant to responding to the deep fake advertisements.  The total amount of their claims is approximately R40 million. None of them were offered any settlements. The allegation that only R14 million is involved is demonstrably false.”

Du Toit emphasised that the ruling does not mean Banxso’s business model is legal and doesn’t affect the liquidation application.

The court order limits what Banxso can do with the remaining money in the accounts. In terms of the court order, they may not withdraw or allow the withdrawal of any of those funds other than to migrate its clients to an alternative financial services provider registered with the FSCA.

Banxso clients who have lost money and believe the fake advertising tricked them, can contact the author at ryk@moneyweb.co.za.

ALSO READ: Banxso victim launches liquidation application

Following the publication of the article, Moneyweb received the following statement from Banxso:

Banxso statement re: Court Ruling on 8 November 2024

Cape Town, 8 November 2024 – Banxso is pleased to announce that the High Court has ruled in our favour, successfully overturning the National Director of Public Prosecutions’ (NDPP) order to freeze our bank accounts. We are grateful for the diligent efforts of our dedicated legal team.

We respect the terms of the court’s order and are committed to moving forward with integrity. As we navigate this transition, Banxso remains focused on our three key pillars: our clients, employees, and suppliers. We are eager to begin processing client withdrawal requests impacted by the account freeze over the course of next week.

Banxso is dedicated to operating within the regulatory framework and maintaining the high standards expected by both our business and regulators. We look forward to continuing our collaboration with the Financial Sector Conduct Authority (FSCA) to address and resolve any concerns, particularly regarding the recent false allegations related to fake advertisement generation and the inappropriate use of client funds.

Our Cape Town offices, staffed by a dedicated team of nearly 200 employees, are fully committed to servicing our existing clients. Their unwavering support during these challenging weeks has been nothing short of exceptional, and we are immensely proud of their dedication to Banxso.

We appreciate the ongoing trust and support of our clients and stakeholders as we embark on this new chapter.

This article was republished from Moneyweb. Read the original here.