South Africa's financial regulator withdrew the license for the online trading platform Banxso due to concerns about the firm's operational practices and potential risks posed to clients.

The FSCA mentioned today (Wednesday) that Banxso's license was withdrawn due to findings suggesting that the company could be engaging in practices posing risks to clients. The authority's concerns include the firm's alleged association with misleading deepfake advertisements and aggressive sales tactics employed by its agents.

Regulatory Actions

These tactics reportedly pressure clients into making hasty decisions without the necessary risk and need analysis. The FSCA noted that such actions breach regulatory guidelines and raise ethical questions about client treatment.

The provisional nature of the withdrawal indicates that the FSCA is still assessing the situation, allowing the FX/CFD brokerage firm an opportunity to respond and possibly overturn the decision once the investigation concludes.

“The FSCA has taken this step because it is concerned that there may be a risk of harm to clients and/or the general public if Banxso continues its operations as a financial services provider,” the regulator mentioned.

“The provisional withdrawal is based on preliminary investigation findings regarding the activities of Banxso and its possible association with the Immediate Matrix deepfake advertisements. Once the investigation is finalized, the FSCA will consider the investigation and any submissions by Banxso.”

In response to the ongoing investigation, the FSCA escalated its actions by notifying the Financial Intelligence Centre (FIC). On October 2, 2024, the FIC intervened by placing a hold on seven of Banxso's bank accounts, citing concerns over potential financial misconduct.

Banxso Fights Back

Banxso challenged this step in the Western Cape High Court, seeking to lift the restrictions. However, on October 8, the court ruled against the firm, maintaining the hold on the accounts.

In a further development, the Asset Forfeiture Unit of the National Prosecuting Authority became involved. On October 14, 2024, the NPA secured a preservation order for the funds in Banxso's accounts, emphasizing the seriousness of the situation and the potential for legal repercussions.

Banxso still holds other licenses in various jurisdictions. Early this year, the brokerage company obtained an Investment Dealer license from Mauritius's Financial Services Commission. The license enables Banxso to offer a range of financial products and services to its international clientele in compliance with Mauritius' regulatory guidelines.