South African regulator, The Financial Sector Conduct Authority (FSCA), has withdrawn Banxso‘s (a popular exchange company) financial services provider (FSP) license due to “deep fake” claims that misled Banxso investors.

The regulator cited Banxso’s advertising, sales strategies and promises of returns on investment (ROI) were unrealistic and ended with marked customer losses. Notedly, the local press reveals the exchange’s past involvement with these practices.

For context, Banxso (Pty) Ltd ran misleading ads that featured prominent figures like Nicky Oppenheimer, Elon Musk, Johann Rupert, etc. Accordingly, these advertisements promised outrageous ROIs (termed unrealistic by the FSCA) to investors lured in and suffered corresponding losses later.

Interestingly, the exchange company denied connections with these ads posted on social media. Meanwhile, the FSCA withdrew Banxso’s license provisionally despite the denials, citing concerns about consumer protection policies.

Per these concerns, Banxso operatives often neglected risk analysis on the exchange’s financial products before marketing them to unsuspecting investors.

FSCA vs Banxso FSP License: Legal Confrontation

The regulator began investigating Banxso in April 2024 following the exchange’s deepfake claims and false advertising. Notably, Banxso, a category 1 FSP, implementing such practices posed significant risks to local investors, hence the need for the inquiry.

Later on, the FSCA in conjunction with the Financial Intelligence Centre (FIC) and the National Prosecuting Authority’s (NPA) asset forfeiture unit froze Banxso’s accounts at the beginning of October.

In a subsequent court hearing, the exchange company contested the FSCA and FIC’s actions. Significantly, the Western Cape High Court ruled to sustain the FIC’s decision to freeze Banxso’s assets on October 8.

In accordance with the Prevention of Organized Crime Act, October 14 saw the National Director of Public Prosecutions (NDPP) stamping a preservation order on Banxso’s company funds.

While more investigations are ongoing, Banxso (Pty) Ltd keeps rallying to clear its name and redeem its FSP License in South Africa.