South Africa’s financial regulator, the Financial Sector Conduct Authority (FSCA), has revoked the license of the online trading platform Banxso following concerns about the firm’s business practices and potential risks to clients.
The FSCA announced on Wednesday that the decision was based on findings that Banxso could be involved in activities that pose significant risks to its customers. The regulator cited concerns about Banxso’s alleged use of misleading deepfake advertisements and the aggressive sales tactics employed by its agents.
Regulatory Concerns
According to the FSCA, Banxso’s sales methods reportedly pressured clients into making rushed financial decisions without conducting proper risk assessments. These tactics violate regulatory guidelines and raise ethical concerns about how clients are treated.
The withdrawal of Banxso’s license is provisional, meaning the FSCA is still investigating the matter. The company has the opportunity to respond and potentially reverse the decision, depending on the outcome of the investigation.
“The FSCA took this action because it believes Banxso’s continued operation as a financial services provider could pose a risk to clients and the general public,” the regulator said.
The decision is based on preliminary findings from the FSCA’s ongoing investigation into Banxso’s activities, including its possible connection to Immediate Matrix deepfake advertisements. Once the investigation is complete, the FSCA will review its findings along with any submissions made by Banxso.
FIC Blocks Banxso’s Bank Accounts
As part of the investigation, the FSCA alerted the Financial Intelligence Centre (FIC), which took further action. On October 2, 2024, the FIC froze seven of Banxso’s bank accounts over concerns about possible financial misconduct.
In response, Banxso sought to challenge this action in the Western Cape High Court, attempting to have the restrictions lifted. However, on October 8, 2024, the court ruled against the company, allowing the hold on the accounts to remain in place.
Legal and Financial Repercussions
The situation escalated further when the Asset Forfeiture Unit of the National Prosecuting Authority (NPA) became involved. On October 14, 2024, the NPA obtained a preservation order to seize the funds in Banxso’s frozen accounts, highlighting the seriousness of the case and the potential legal consequences.
Despite this setback, Banxso continues to operate under other licenses in various jurisdictions. Earlier this year, the company secured an Investment Dealer license from the Financial Services Commission in Mauritius, allowing it to offer financial products and services to international clients while complying with Mauritius’ regulatory standards.
