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Banxso Faces Scrutiny Amid Liquidation Proceedings and Client Fund Migrations

Published November 13, 2024
3 months ago

In a dramatic turn of events, the Western Cape High Court has granted Banxso, a South African online trading platform, temporary relief by lifting a preservation order on its bank accounts. This order, however, is precise in its limitation — funds can only be used for the specific purpose of transferring client accounts to an FSCA-authorized financial service provider, in light of Banxso's Financial Services Provider (FSP) license withdrawal.





These developments form the latest chapter in Banxso's contentious operations saga, which has implicated the company in deceptive advertising practices. The platform had previously attracted investors using deep fake ads—falsely featuring wealthy individuals like Elon Musk, Johann Rupert, and Nicky Oppenheimer—leading to significant financial losses for many who engaged with these promotions.


The initial intervention in Banxso's operations came from the Financial Intelligence Centre (FIC), which effectively froze company bank accounts on October 2, 2024. Subsequently, on October 14, the Asset Forfeiture Unit (AFU) secured a preservation order. However, in a recent update from the FSCA, the High Court has now set that preservation order aside, albeit with strict conditions attached.


The direction from the FSCA is clear: Banxso can no longer legally conduct any financial services business or accept client deposits for this purpose. Moreover, the authority has taken additional steps by contacting Banxso with the intention of ensuring an "orderly transfer of clients" to authorized entities.


Compounding the company's woes, allegations have surfaced of Banxso still conducting financial services activities sans a valid license. Reports suggest that the company has been inviting clients to invest additional funds to recoup previous trading losses. Concurrently, an application for Banxso's liquidation is in the pipeline, with the court proceedings slated for December 4, 2024.


Banxso, for its part, has publicly addressed these concerns, asserting that it did not endorse any misrepresentation of its licensing status and is staunchly repudiating the liquidation efforts. It vows to adhere to the court order and ensure client withdrawals are handled once funds are freed up from its banking partners.


Noteworthy, in the sphere of public opinion and industry insight, is the perspective of veteran fraud investigator Bart Henderson. Henderson highlights the ambiguity in the FSCA's statements regarding which authorized financial services provider will receive the funds and the potential linkages between Banxso and these providers.


Further fuelling skepticism are queries about the trade in companies with existing Financial Services Licences, which has become a notable market activity. Amid these concerns, the genuine ability of investors to withdraw their funds stands as a critical issue. Henderson's commentary draws attention to the larger implications of the transfer of Banxso's assets while liquidation looms.


There is a palpable sense of unease as stakeholders await clarity on how the migration of client funds to authorized providers will take shape against the backdrop of potential corporate restructuring or rebranding under investigation.


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