The Financial Sector Conduct Authority (FSCA) has provisionally revoked the license of Banxso, a South African online trading platform, following concerns over its promises of unrealistic returns. This decision stems from preliminary investigations into Banxso’s activities and its potential link to deepfake advertisements from Immediate Matrix.
Earlier in April 2024, the FSCA issued a media statement warning the public that it was investigating Banxso for “potential violations of financial sector laws.” The platform has faced backlash after several deepfake ads featured prominent billionaires such as Elon Musk, Johann Rupert, and Nicky Oppenheimer. Many investors who were lured in by these ads reported losing millions.
In its latest statement, the FSCA explained that the provisional withdrawal was necessary due to fears of harm to clients and the public if Banxso continued to operate as a financial services provider. The regulator cited several concerns, including aggressive sales tactics, unrealistic return promises, failure to conduct proper risk assessments, and significant losses reported by clients.
“The FSCA is particularly concerned about Banxso’s aggressive and pressurized sales techniques, their failure to conduct the required risk and needs analysis before placing clients in specific products, and the substantial losses suffered by clients,” the regulator stated.
The FSCA will review the investigation’s findings and any responses from Banxso before making a final decision on the license revocation. Banxso has been given the opportunity to submit reasons to lift the provisional withdrawal.
In addition, the FSCA reported the case to the Financial Intelligence Centre (FIC), which intervened on October 2, 2024, by freezing seven of Banxso’s bank accounts under Section 34 of the Financial Intelligence Centre Act. Banxso attempted to have the freeze lifted through the Western Cape High Court on October 4, but the court ruled to maintain the freeze.
Furthermore, the FSCA escalated the case to the National Prosecuting Authority’s Asset Forfeiture Unit. On October 14, 2024, the National Director of Public Prosecutions secured a preservation order for the funds in Banxso’s accounts under the Prevention of Organised Crime Act.
Earlier in January 2024, the FSCA had cautioned the public against certain investment opportunities, specifically naming Livestock Wealth Financial Services (Pty) Ltd and its parent company, Livestock Wealth (Pty) Ltd, an agri-investment startup, as entities to be wary of.
This ongoing action by the FSCA highlights the regulator’s commitment to protecting investors from potentially harmful and deceptive financial practices.