The Financial Sector Conduct Authority has said the online trading platform’s licence remains withdrawn despite a recent court ruling
The Financial Sector Conduct Authority (FSCA) has warned the public that the licence of Banxso, the online trading platform on which scores of investors have lost millions of rands, remains withdrawn despite the court setting aside an earlier preservation order.
The FSCA provisionally withdrew Banxso’s financial service provider licence (FSP 37699) in mid-October and brought its investigation and preliminary findings to the attention of the Financial Intelligence Centre and the National Prosecuting Authority’s (NPA) Asset Forfeiture Unit (AFU).
This led to the Financial Intelligence Centre freezing Banxso’s bank accounts on 2 October before the NPA successfully applied for a preservation order on 14 October.
In a statement on Tuesday, the FSCA said the Western Cape high court had “reconsidered and set aside” the preservation order.
“However, the court ordered that Banxso shall not withdraw or allow the withdrawal of any funds in the bank accounts, other than for purposes of migrating clients to an alternative financial services provider that is authorised by the FSCA,” it said.
“The transfer of funds to an authorised financial services provider is required because Banxso’s FSP licence remains withdrawn, and as a result Banxso cannot conduct any financial services business. Banxso itself cannot deal with the funds in the bank accounts that were preserved.”
Several investors who previously spoke to the Mail & Guardian alleged that Banxso consultants contacted them after they clicked on deepfake adverts featuring prominent business people such as Elon Musk, Johann Rupert, Nikky Oppenheimer and SABC anchor Leanne Manas, offering excellent returns for a minimum investment of R4 800.
People then invested using an online trading platform allegedly on the trading advice of Banxso’s “success managers”.
Banxso chief operating officer Manuel de Andrade has denied that the company has any links to the deepfake adverts that were created by Immediate Matrix, a company that the FSCA last December warned consumers to steer clear of.
On Tuesday, the FSCA said it was also a condition of the provisional withdrawal of Banxso’s licence that it must transfer all its clients funds to an authorised financial services provider. The authority said it was in discussions with Banxso to ensure an orderly transfer of clients.
“The FSCA is aware of allegations that Banxso is contacting clients and advising them that it [Banxso] ‘has been cleared’, that its licence has been reinstated and that it may render financial services. The authority has interviewed witnesses who have confirmed this and will investigate these allegations further,” it said.
“The FSCA is also investigating statements from clients of Banxso who maintain that Banxso is continuing to conduct financial services business, notwithstanding the withdrawal of its licence. The information received by the FSCA indicates that clients are encouraged to commit more funds to Banxso to recover losses made in trading.”
Several investors who spoke to the M&G earlier this year also claimed that Banxso consultants had urged them to invest additional funds on its platform to recoup the losses they had already incurred.
“The authority reiterates that Banxso’s licence has not been reinstated and that it cannot lawfully conduct any financial services business or receive any deposits from clients for such purpose,” the FSCA said.
“The FSCA’s investigation into the activities of Banxso and its officers is ongoing.”
An application for the liquidation of Banxso has also been brought in the Western Cape high court. The authority is cited as a respondent in the matter which is set down to be heard on 4 December.
Banxso said on Tuesday that it acknowledged the FSCA’s statement regarding allegations that it has been trading without a valid licence.
“We take these claims seriously and are currently investigating reports that some agents may have misrepresented our licensing status to clients, specifically asserting that our Financial Services Provider (FSP) licence has been reinstated,” it said.
“We want to make it unequivocally clear that this is not the case, and any such statements are not endorsed by Banxso. We have communicated this matter to our approximately 200 employees and service providers, reinforcing our commitment to transparency and compliance.”
The platform said it was “actively opposing” opposing the liquidation proceedings.
“In the interim, we are working diligently to facilitate all client withdrawals in accordance with the court order pending the release of funds from our banking partners. We assure our clients that we are committed to honouring all withdrawal requests as soon as the funds are made available.”
Banxso added that it was “fully cooperating” with the FSCA and had taken “proactive steps to enhance our internal protocols to ensure compliance with all regulatory requirements”.
“This includes improvements to client engagement, Know Your Customer (KYC) processes, and payment procedures. Our dedication to upholding the highest standards of conduct and adhering to the regulatory framework remains unwavering,” the company added.
This story has been updated with comment from Banxso