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Banxso, a South African trading firm known for sponsoring the national football team Bafana Bafana, is currently on the brink of liquidation following serious charges of financial improprieties. The Western Cape High Court has received an application for the company's liquidation amidst ongoing probes into its operations and advertising practices.
The crisis began when the Financial Sector Conduct Authority (FSCA) issued a statement that Banxso had misled clients about the status of its operating licence. Despite its provisional withdrawal on October 16, 2023, due to customer grievances and potential legal breaches, Banxso allegedly informed its investors it was cleared to continue its activities.
Harbinger to Banxso's troubles were the 'deepfake' advertisements, fraudulently using the likenesses of notable personalities like Elon Musk, Johann Rupert, and Nicky Oppenheimer to promote the brand, which the firm has since disavowed, citing that they fell prey to hacking actions.
The dubious marketing schemes asserted that investors could reel in up to R300,000 per month from a base investment of R4,700, which has resulted in substantial financial losses for deceived clients. These issues are what instigated the FSCA's preliminary inquiry, casting doubt on Banxso's advertising strategies and customer interaction methods, which included aggressive selling and unrealistic return promises without appropriate risk assessment.
Additionally, regulatory bodies have raised concerns over the way Banxso's agents approached clients, pushing them toward specific financial products without duly performing the required risks and needs analyses.
The FSCA's attention led to the Financial Intelligence Centre (FIC) placing a hold on seven of Banxso's bank accounts. Banxso's attempt to have these holds lifted was unsuccessful, and the National Director of Public Prosecutions further secured a preservation order for funds in these accounts.
Even after unfreezing R100 million from its accounts by a court ruling, stipulations were put in place prohibiting Banxso from withdrawal of funds, except to facilitate the transfer of clients to an authorized financial services provider, in respect to the continued withdrawal of Banxso's operational licence.
The FSCA has been actively working with Banxso to ensure the orderly transfer of its clientele. Still, reports have emerged of Banxso advising clients that it's business as usual. The FSCA has condemned these communications as false, reiterating the illegality of Banxso's current services. Witnesses have confirmed the misleading advisories, prompting further examination by the authority.
The case has since escalated, with the FSCA noting that clients are still being urged to invest more to mitigate their losses. An application has now been brought forth to the High court for the liquidation of Banxso, with the FSCA cited as a respondent. The hearing is deferred to December 4, 2024.
While embroiled in these proceedings, Banxso still maintains its innocence regarding financial malpractice and is actively engaging with all parties involved to resolve the matter. The firm asserts a stance of compliance and transparency, aiming to protect clients' interests and achieve a favorable resolution.