South Africa’s Financial Sector Conduct Authority (FSCA) provisionally withdrew the financial services provider license of the trading platform Banxso on Wednesday, citing concerns over its marketing practices that promised unrealistic returns to clients. The move follows allegations that Banxso employed deep fakes in its advertising campaigns and used aggressive sales techniques to pressure clients into investing without proper risk assessments. The FSCA raised the alarm about Banxso’s potential involvement with deep fake ads featuring high-profile billionaires like Elon Musk, Johann Rupert, and Nicky Oppenheimer. These ads allegedly lured investors, resulting in substantial losses.
Many clients said they lost money after deciding to invest. Banxso has denied links to the adverts which spread on social media. Banxso, which targeted tech-savvy South African millennials with a diverse investment portfolio, promised substantial returns on investments that the FSCA deemed unrealistic. The authority expressed particular concern over the “aggressive and pressurized sales techniques” employed by Banxso’s agents. However, the FSCA noted that Banxso agents frequently failed to conduct necessary risk and need analyses before selling financial products, exacerbating concerns about client protection. In response to the troubling practices, the FSCA has alerted the Asset Forfeiture Unit of the National Prosecuting Authority (NPA) and the Financial Intelligence Centre (FIC) and requested that seven of Banxso’s accounts be frozen. Following this request, the FIC placed a hold on Banxso’s bank accounts in early October. The company contested the hold in court, but on October 8, the Western Cape High Court upheld the FIC’s decision.
Meanwhile, 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’s investigation into Banxso began in April following several public complaints about potential violations of South Africa’s financial sector laws. According to the authority, Banxso, authorized as a Category I financial services provider, initially cooperated with the inquiry. On Wednesday, the FSCA raised fresh concerns, warning that Banxso’s continued operation as a financial services provider could pose significant risks to both clients and the public. Banxso’s Chief Operating Officer, Manuel de Andrade, has previously rejected claims about the firm’s connection to deepfake ads, reiterating its commitment to clearing its name.
