The Financial Sector Conduct Authority (FSCA) has imposed more than R2 billion in fines on online trading platform Banxso, one of the largest penalties in South African regulatory history.
It has also fined several of its directors after a major investigation found serious misconduct and widespread breaches of South African financial laws.
Banxso launched in 2021 and grew quickly by marketing itself as a platform that made global trading accessible to ordinary South Africans.
It offered trading in Forex, stocks, indices, commodities, and cryptocurrencies through its BanxsoX and AutoBanxso systems, and promoted itself heavily through sponsorships of Bafana Bafana and UFC champion Dricus du Plessis.
However, the FSCA has revealed that Banxso and its leadership were engaging in behaviour that severely harmed clients and undermined the integrity of the financial sector.
“The Financial Sector Conduct Authority (FSCA) has imposed administrative penalties of R2 billion on Banxso (Pty) Ltd (Banxso), and its directors,” the regulator said in a statement.
It added that Banxso was fined a further R16 million for other contraventions.
Other directors and key individuals were fined a combined R35 million. The FSCA also debarred the directors for between 10 and 30 years.
The penalties follow what the regulator described as an extensive investigation into Banxso’s operations.
According to the FSCA, Banxso and its key individuals misappropriated client funds, gave false or misleading information to both clients and the regulator, promised unrealistic returns, and failed to act in the best interests of their customers.
“The investigation found that Banxso and its key persons, inter alia, misappropriated client funds, provided false and misleading information to clients and to the FSCA, promised clients unrealistic returns and failed to act in the best interests of its clients,” the regulator said.
Matter handed over to the SAPS
The FSCA found that Banxso and those involved had breached several key acts and regulations.
This includes the Financial Sector Regulation Act, the Financial Advisory and Intermediaries Services Act, the Financial Institutions (Protection of Funds) Act, and the Financial Markets Act Regulations.
It said the size of the penalties reflects the financial gains Banxso derived from its unlawful conduct, the seriousness of the misconduct, and the impact on clients and the wider financial system.
These factors were crucial in determining the scale of the fines and are intended to act as a strong deterrent to other companies.
Several users raised concerns about AI-generated deepfake videos circulating online, which falsely appeared to show prominent figures such as Elon Musk endorsing Banxso and promising high returns.
Some clients said they had signed up after seeing these videos and ultimately lost money trading contracts for difference (CFDs).
One investor who claimed to have lost R500,000 even approached the courts to have the company wound up.
As the situation worsened, the Western Cape High Court intervened. In August, Judge Andre le Grange placed Banxso under provisional liquidation and said he was satisfied that its business model was illegal. The FSCA’s findings now reinforce that view.
With the regulatory process now complete, the FSCA said the severity of the misconduct requires further action.
Given the seriousness and extent of the misconduct, the FSCA has decided to report the matter to the South African Police Service (SAPS).
It added that it would share all the evidence obtained during the investigation with SAPS. The Authority will also provide active assistance to SAPS, if requested.
In a statement to Moneyweb, Banxso said that it had engaged its legal team and is “exploring all available mechanisms to address what we believe to be fundamental concerns with this outcome”.
