WATCH: Banxso defies licence suspension

Despite the Financial Sector Conduct Authority (FSCA) provisionally suspending Banxso’s licence to operate a derivatives trading platform in South Africa on 16 October 2024, the company continues to conduct business as usual.

Moneyweb was able to complete several trades on a client’s account, demonstrating that the platform remains operational. The FSCA provisionally withdrew Banxso’s licence after the Financial Intelligence Centre (FIC) instructed Standard Bank, Nedbank and Capitec to freeze the company’s bank accounts.

The Asset Forfeiture Unit has also taken control of the funds in these accounts. The FIC, in court papers, stated that it ordered the account freezes as it had “reasonable grounds for suspecting that the transactions were the proceeds of unlawful activity”.

Despite these actions, Moneyweb’s video shows that Banxso’s trading platform remains fully operational. This ongoing activity directly contravenes the FSCA’s mandate, which prohibits any financial services transactions involving financial products while a licence is suspended.

Gerhard van Deventer, head of the FSCA’s investigative unit, responded to questions stating that the FSCA was unaware that the platform was still allowing trades.

“Thank you for bringing it to our attention; we are looking into it as a matter of urgency. No transactions are allowed if the licence is suspended because it amounts to financial services with a reference to a financial product,” he said.

ALSO READ: The FIC busts Banxso

Following the freeze on its bank accounts, Banxso filed an urgent application with the Western Cape High Court to have the accounts unfrozen. However, the court dismissed the application with costs, including a punitive cost order on a scale C, which represents the most severe cost penalty.

Moneyweb can also confirm that Banxso has not informed its clients about the FSCA’s provisional suspension of its licence nor about the actions taken by the FIC and the Asset Forfeiture Unit.

The trading account Moneyweb used did not allow additional funds to be deposited through electronic fund transfers, although credit card deposits still seemed possible.

Banxso, based in Cape Town, gained prominence through its sponsorships of high-profile sports teams and athletes, including Bafana Bafana and UFC champion Dricus du Plessis.

However, the company has been linked to numerous deep fake advertisements promoting fraudulent investment opportunities. These ads falsely promised returns of up to R300 000 per month on a one-time investment of R4 700, with fake endorsements from billionaires like Elon Musk and Johann Rupert.

Banxso denied any involvement in these schemes, claiming it was the victim of hackers. However, court documents suggest the platform played an active role in directing investors to its trading services through these misleading ads.

The FSCA’s investigation revealed extensive client deposits into Banxso’s accounts, totalling nearly R880 million, with more than a thousand transactions from people depositing R4 700 each.

ALSO READ: FSCA warns that scammers are impersonating financial services providers

Banxso previously stated it had refunded R14.1 million to investors who were misled by the fake advertisements. However, since Moneyweb first reported on the matter, nearly 200 individuals have come forward, collectively claiming losses of approximately R110 million.

Since the recent updates, around 15 additional victims have contacted Moneyweb, reporting combined losses of nearly R5 million.

In total, more than 210 victims have now reported losses, with the total claims amounting to R115 million.

Moneyweb sent questions to Banxso’s lawyer, but as at the time of publication, no response had been received. In previous communications, Banxso’s lawyer forbade Moneyweb from addressing any questions to the company, accusing the journalist of harassment.

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