The Financial Sector Conduct Authority (FSCA) in South Africa has issued an interim suspension on Banxso exchange financial services license. This decision came after the FSCA’s investigations showed that Banxso was overselling its trading platform to clients in its marketing outreach.
There are allegations against Banxso that deepfake technology was used in the video ads and they used aggressive tactics to sell their services to people encouraging them to invest without understanding the risks involved. The FSCA is especially concerned with deepfake advertisement campaigns that bear the images of well-known people such as Elon Musk, Johann Rupert, and Nicky Oppenheimer. It is claimed that such promotions misrepresented the situation and encouraged investors to make decisions that led them to heavy losses.
Many of those who invested say they ended up losing money. According to Banxso, however, such advertisements are false and they have no relations with the social ads which went viral.
The FSCA provisionally withdraws the FSP licence of Banxso (Pty) Ltd.
Full statement here: https://t.co/MijZKuxY6q#TCF #consumerprotection pic.twitter.com/3iW9dko5lD
— FSCA South Africa (@fscasouthafrica) October 16, 2024
Banxso Exchange License Gets Withdrawn Over Fraud Allegations
Banxso exchange, which aimed at tech-savvy South African millennials with a wide range of investment options, promised returns that the FSCA found to be unrealistic. The authority raised concerns about the “aggressive and pressurized sales tactics” used by Banxso’s agents.
They also pointed out that these agents often neglected to perform the required risk and needs assessments before selling financial products, raising more red flags about client safety. In response to these issues, the FSCA notified the Asset Forfeiture Unit of the National Prosecuting Authority (NPA) and the Financial Intelligence Centre (FIC), asking for seven Banxso exchange accounts to be frozen.
The FIC placed a hold on Banxso’s bank accounts in early October. Banxso exchange challenged the hold in court, but on October 8, the Western Cape High Court ruled in favour of the FIC.
Can Banxso Exchange Come Out Clean From These Allegations?
On October 14, the National Director of Public Prosecutions (NDPP) secured a preservation order on the company’s funds under the Prevention of Organised Crime Act.
The FSCA started looking into Banxso back in April after getting several complaints from the public about possible breaches of South Africa’s financial laws. Banxso, which is registered as a Category I financial services provider, initially worked with the investigators.
But on Wednesday, the FSCA shared new concerns, saying Banxso’s ongoing operations as a financial services provider could be a serious risk to clients and the public. Banxso’s Chief Operating Officer, Manuel de Andrade, has denied any links to deepfake ads and emphasized that the company is committed to proving its innocence.
South Africa’s Tax Agency Adds Crypto to Compliance Programs
The South African Revenue Service (SARS) is making concerted moves to incorporate crypto assets into its tax compliance programs. The organization is collecting data on crypto users and boosting its attempts to locate and audit those who are non-compliant.
The SARS enquires on the taxpaying citizens who have problems with their compliance to the requirements of the law to apply for the Voluntary Disclosure Program which excludes those who are already under audit. They have also warned about possible dire consequences, which follow deliberate tax avoidance, and vowed to pursue all tax payers who are in default. SARS has collaborated with the Financial Sector Conduct Authority (FSCA) and crypto service providers to obtain the needed information.
On October 9, SARS explained that it had to act after noticing taxpayers weren’t reporting their crypto assets and trades in their tax returns. The statement highlighted that, under South African law, SARS must account for all forms of income and assets, including cryptocurrencies. This prompted the revenue service to first ask entities involved with crypto to voluntarily declare their holdings.
In conclusion, the FSCA’s suspension of Banxso exchange financial services license underscores the need for regulatory oversight in the trading sector. As South Africa’s SARS enhances its focus on crypto asset compliance, it highlights a growing commitment to ensuring that all financial activities are transparent and accountable, protecting consumers from potential exploitation.
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