Banxso: FSCA suspends licence and FIC freezes bank accounts

The FSCA has provisionally withdrawn the FSP licence of Banxso (Pty) Ltd, a Cape Town-based online trading platform, citing concerns over potential harm to clients and the public.

The move follows the FSCA’s ongoing investigation into Banxso’s activities and its alleged involvement with deepfake advertisements featuring well-known figures such as Elon Musk and Johann Rupert.

The adverts, which falsely promised substantial investment returns, were linked to a shadowy entity called Immediate Matrix. Last December, the FSCA cautioned the public against doing financial services business with Immediate Matrix.

In April, the Authority announced it had initiated an investigation into possible contraventions of financial sector laws by Banxso after numerous complaints about its conduct.

Read: Banxso: FSCA to investigate allegations of financial misconduct

The FSCA said its provisional action was based on preliminary findings that raise concerns about Banxso’s operations. The regulator cited apparently aggressive and high-pressure sales tactics, promises of unrealistically high returns, failure to conduct appropriate risk and needs analyses before placing clients in products, and significant financial losses suffered by clients as key factors prompting the licence withdrawal.

The Authority emphasised that the licence withdrawal is provisional, pending further investigation and further submissions by Banxso that could lead to the lifting of the suspension.

Banxso, which came to prominence through sponsoring Bafana Bafana and UFC champion Dricus du Plessis, has denied any involvement with the controversial adverts.

In February, Moneyweb reported that Banxso seemed to be profiting from the deepfake adverts, which promised absurd profits, such as R300 000 a month from a once-off investment of R4 700. According to Moneyweb’s investigation, people who responded to the ads and signed up on Immediate Matrix’s platforms were quickly enrolled as Banxso customers.

Manuel de Andrade, Banxso’s chief operating officer, has stated that the company has no connection to the adverts and claimed it was a victim of hacking.

Adding to Banxso’s problems, the Financial Intelligence Centre (FIC) placed a hold on seven Banxso bank accounts on 2 October. The FIC took this step under section 34 of the Financial Intelligence Centre Act, suspecting that the transactions in these accounts were the proceeds of unlawful activities.

The FIC’s decision followed the FSCA’s request to freeze the accounts and alert the Asset Forfeiture Unit of the National Prosecuting Authority.

Banxso responded by filing an urgent application in the High Court in Cape Town to lift the freeze on its accounts, claiming that R72m was tied up in the frozen accounts. However, the court dismissed Banxso’s application on 8 October, and the hold remains in place.

On 14 October, the National Director of Public Prosecutions successfully obtained a preservation order for the funds under section 38 of the Prevention of Organised Crime Act, reinforcing the legal grip on Banxso’s assets.

Banxso responds

In a statement yesterday, Banxso “vehemently” denied all allegations of financial misappropriation and/or the maladministration of client accounts, as well as any allegations in respect of deepfake advertisements and “any impropriety related thereto”.

“The company maintains that this is a misstatement of fact, which will be fully ventilated in the appropriate forums as more details are made available to us.”

Banxso said it was committed to ventilating all the relevant facts that may assist the FSCA in finalising its investigations “with a positive outcome towards the company and its clients”.

The statement said Banxso is engaging with relevant stakeholders, together with the FSCA, to gather all the necessary facts and understand the full scope of the situation.

The company said it is committed to transparency and regulatory compliance across all its operations.

“Moreover, the company’s primary focus remains resolute on protecting clients’ interests at all costs, and, as such, it will do everything in its power to ensure business continuity as far as possible within the confines of the FSCA’s regulatory processes.”