Banxso (Pty) Ltd, a financial services platform in South Africa, is involved in a legal dispute with the Financial Sector Conduct Authority (FSCA), marking one of the most significant regulatory challenges in the country’s fintech sector in recent years.

This rare public clash highlights ongoing issues related to client communication, compliance, and the broader regulatory environment impacting South Africa’s growing fintech industry.

The dispute stems from a wider investigation into Banxso’s business practices and regulatory compliance. Customer complaints have further fuelled the controversy, with many alleging that misleading advertisements featuring prominent South African and international figures lured them to the platform. According to reports, these ads featured celebrities such as tech mogul Elon Musk and billionaire Johann Rupert, leading users to invest in Banxso—only to later incur significant losses. So far, about 260 customers have come forward, claiming that these deceptive ads led them to lose over R160 million.

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FSCA Revokes Banxso’s Licence and Freezes Assets

The legal battle dates back to October 16, 2024, when the FSCA accused Banxso of violating regulatory standards and subsequently revoked its license. The FSCA also referred the case to the Asset Forfeiture Unit (AFU) of the National Prosecuting Authority (NPA) and the Financial Intelligence Centre (FIC). In response, the FIC froze Banxso’s bank accounts on October 2, while on October 14, the AFU secured a preservation order, effectively preventing the company from accessing its customers’ funds.

But on November 8, the Western Cape High Court overturned the preservation order, granting Banxso a temporary reprieve. The decision , however, had a clause that Banxso could only withdraw funds necessary to transfer clients to an approved financial services provider. Since Banxso’s licence has been revoked, the company cannot provide financial services or accept client deposits.

Despite the strict guidelines issued by the court, Banxso continues to face accusations of misinformation. Clients allege that Banxso representatives falsely claimed the company’s Financial Services Provider (FSP) license had been reinstated and that the trading platform remains operational despite the provisional withdrawal of its license. 

Pierre du Toit, the attorney representing the clients in the liquidation application against Banxso, said “It is most concerning that a number of our clients were approached by Banxso agents shortly after the discharge of the preservation order, advising that Banxso’s license had been reinstated and that trading could resume. This is a blatant misrepresentation.” 

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Liquidation hearing to determine Banxso’s fate

A liquidation hearing will commence between the FSCA and Banxso and has been scheduled for November 4. The South African law allows liquidation processes to evaluate a company’s financial stability, which might liquidate Banxso’s remaining assets to settle creditors. One of South African fintech’s largest compliance and advertising liquidation applications may be successful.

The outcome of this hearing is fundamental. The company released a statement after the reservation order stating that it “remains focused on its clients, employees, and suppliers” and is “committed to operating within the regulatory framework.” 

For Banxso, the outcome of the December 4 hearing, combined with the findings from ongoing investigations, could signal a turning point. The company released a statement following the preservation order’s reversal, asserting that it “remains focused on its clients, employees, and suppliers” and is “committed to operating within the regulatory framework.” Banxso also acknowledged the court’s restrictions on fund withdrawals and affirmed its intention to facilitate client transfers to other authorised financial service providers.

The Banxso scandal provides insights into the challenges and risks of fintech regulation, emphasising the need for explicit compliance in a competitive industry.