Banxso (company name: Banxso International) is a brokerage company that offers exclusive service to South African traders. Over the years, it has provided reliable and competitive brokerage services in the South African financial market.
But 2024 changed the regulatory landscape of the company – it was hit with a triple blow by the different financial agencies in the country, ending in the Financial Sector Conduct Authority withdrawing its Financial Service Provider (FSP) license.
Here’s everything you need to know about FSCA’s provisionally withdrawing Banxso’s FSP license.
What Is Banxso (Pty) Ltd.
Banxso is a South African online trading platform that provides brokerage services and investment products to South African investors.
Through MetaTrader 5 and Banxso X trading platforms, traders can access over 16,000 assets across major financial markets, including forex, cryptocurrency, stocks, and commodities.
Additionally, clients can access Cooma – Banxo’s social trading platform which allows traders to copy the trade setup of other Banxo clients.
By offering 8.7% interest rates on equity, this platform claimed to provide “one of the world’s best trading experiences.”
True enough, this account feature had contributed to appeal to South African investors, especially those who seek passive income.
Its appeal has gotten a little smeared this year- especially now that the Financial Sector Conduct Authority has provisionally withdrawn its license as a Financial Service Provider.
Currently, the brokerage company is authorized by the Financial Services Commission of Mauritius as an investment dealer, with a license number of GB23201707.
The Financial Sector Conduct Authority Provisionally Withdrawn Banxso’s FSP License
Banxso (Pty) Ltd. was previously authorized by the Financial Sector Conduct Authority (FSCA) as a Category I financial services provider with license number 37699.
However, the FSCA has published a press release announcing the provisional withdrawal of FSP license.
This regulatory decision was made as the brokerage company was deemed to provide financial service that harms the interests of South African investors. This decision followed the FSCA’s investigation of Banxso’s possible association with the Immediate Matrix deep fake advertisements.
The FSCA emphasized that this decision was based solely on the initial investigation and findings. Today, the regulatory body provided with an opportunity to dispute the license withdrawal and request for possible lifting.
Once the investigation is finalized, the regulatory body will evaluate the case investigation and request to lift the license withdrawal.
Read here the full statement of the Financial Sector Conduct Authority:
Reasons Behind Banxso’s Provisional License Withdrawal
Banxso stands together with the leading financial service provider in South Africa. It still is today; however, several regulatory hurdles make South African investors question the brokerage company’s credibility in safeguarding their investments and interests.
Here are the main reasons why the FSCA provisionally withdrew Banxso’s FSP license.
Benefiting from Deepfake Ads
The alleged association of Banxso with the Immediate Matrix deepfake advertisements was the root of its regulatory hurdles. Briefly, deepfake ads contain fake media (usually AI-generated) of a public figure to promote a brand or product.
Following FSCA’s press release against Immediate Matrix, the regulatory body had received several complaints from South African investors.
Amongst complaints are the broker activities that say to benefit from deepfake advertisements featuring Elon Musk and other billionaires.
Aggressive and Pressurized Sales Techniques
The common denominator of the complaints received by the FSCA is the unethical sales techniques. Clients reported that the agents aggressively sell their financial products, which pressures them to invest with the broker.
Moreover, clients claimed that the agents actively promised them high returns – which lured them to execute a higher volume of investments than usual. In the end, clients suffered relatively bigger losses than usual.
Read more: 3 Signs of Scam Brokers and Tips to Avoid Them (tradersunited.org)
The Escalation of the License Withdrawal
In 2024 alone, Banxso was hit with three critical punches from South African government agencies.
- April 19, 2024. The FSCA received massive complaints from South African investors regarding the malicious and unethical brokerage operation. This led to the FSCA’s investigation, specifically into its involvement in Elon Musk’s deep fake adverts.
- October 4, 2024. The Financial Intelligence Centre (FIC) holds seven (7) of Banxso’s bank accounts as per FSCA’s directories. After an hour, Banxco appeared at the Western Cape High Court to discuss the matter.
- October 8, 2024. The Western Cape High Court ruled against the company, and the bank account holding remained effective.
- October 14, 2024. The Asset Forfeiture Unit of the National Prosecuting Authority (NPA) applied for the preservation order of the funds held in the frozen accounts. This filling is in accordance with section 38 of the 1998 Prevention of Organized Crime Act.
- October 16. 2024. The FSCA provisionally withdrew Banxso’s FSP license.
Banxso’s Response to the Issue
Banxso has acknowledged the issue at hand and is in full correspondence and cooperation with the FSCA and FIC to address all the concerns raised about its operations. Banxso firmly restated that the regulatory sanction – the withdrawal of the FSP license – is still provisional.
The company denied any involvement in financial misappropriation or impropriety to assure its clients and South African investors. Ultimately, the company maintains that its deepfake advertisement is from a cyber-attack.
To compensate the clients who lost money due to such advertisements, Banxso has stated that it refunded R14.1 million to investors affected by the fraudulent ads – the amount is believed to cover the total impact of the scheme.
According to its press release, the company’s main focus still remains “protecting clients’ interests at all costs.”
Read the full response of Banxso here:
Is Trading with Banxso Worth the Risk?
While Banxso offers several attractive features and tools for traders, the recent regulatory issues and inherent risks of trading should be carefully considered.
It’s essential to conduct thorough research and possibly consult with an expert before deciding to trade on Banxso. At CommuniTrade, you’re connected to thousands of traders to discuss anything about trading- including broker experiences for more practical and genuine insights!
