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South African Financial Regulator Levies R216 million Fine and Debars "Cryptopreneur" for Banking Act Contraventions

Published March 31, 2024
1 months ago

In a landmark decision, the Financial Sector Conduct Authority (FSCA) of South Africa has imposed a hefty fine of R216 million on Coenraad Botha, the operator behind CBI X SA, for significant contraventions of the country's banking legislation. The move follows an extensive investigation by the regulator, which revealed that Botha, along with his associated entities including CBI Association, had been involved in illegitimate financial activities that defrauded investors.

The case revolved around Botha and his associates soliciting funds from the public by promising weekly returns ranging from 1% to 4%, which the FSCA determined to be unsustainable, characterizing them as nothing more than the ill-famed "returns" of a Ponzi scheme. Remarkably, Botha had dubbed himself a "cryptopreneur," an increasingly popular term among cryptocurrency enthusiasts.

Further trouble for Botha emerged from the neighboring jurisdiction of Namibia. After apparently attempting to flee Namibia for South Africa with his partner, Botha faced charges laid by Namibian authorities for offences including fraud and violations of the Prevention of Organised Crime Act. Botha’s arrest at Buitepos and subsequent court appearance in Windhoek point to a cross-border sweep of justice, ensnaring not just Botha but also his legal representative, Afrika Jantjies, who is accused of being an accomplice.

In Namibia, Botha is also implicated in illicit banking operations through his CBI Exchange Namibia, said to have accepted public deposits without requisite licensing. Kazembire Zemburuka of the Bank of Namibia highlighted Botha's contravention of their local Banking Institutions Act, pinpointing the regional implications of these financial misdeeds.

The FSCA's actions serve not just as a punitive measure but as a blunt warning to the South African public about the proliferation of fraudulent schemes masked as promising investment opportunities. The FSCA emphasized the importance of dealing exclusively with authorized financial services providers and remaining vigilant against the lure of high returns without corresponding risks. They stress the necessity for consumers to verify that financial advisors and firms are properly licensed by the FSCA to offer financial services.

Despite the increasingly sophisticated façade of such operations, which often appear as legitimate businesses, countless South Africans have suffered financial losses, emphasizing the need for continuous consumer education on recognizing and evading such scams. The FSCA's list of 'red flags' and advice on ensuring the authorization of financial services providers forms a crucial part of their consumer protection efforts.

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