BANXSO denies ongoing trade & will fight liquidation
The Western Cape High Court has set aside a preservation order on Banxso's bank accounts, allowing limited fund use solely for migrating clients to an FSCA-authorized provider.
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By Chris Steyn
The Western Cape High Court has set aside a preservation order on Banxo's bank accounts.
However, the court also ordered that Banxso shall not withdraw or allow the withdrawal of any funds in the bank accounts, other than for purposes of migrating clients to an alternative financial services provider that is authorised by the Financial Sector Conduct Authority (FSCA).
These latest developments were confirmed today (12 November) in an update from the FSCA on its ongoing investigation into Banxso, the online trading platform under fire for "benefiting" from deep fake ads featuring billionaires Elon Musk, Johann Rupert and Nicky Oppenheimer. Scores of investors who clicked on the ads have reported losses totalling millions.
In its previous statement, the FSCA informed the public that it had brought the investigation of Banxso and preliminary findings to the attention of the Financial Intelligence Centre (the FIC) and the Asset Forfeiture Unit (AFU) of the National Prosecuting Authority (the NPA). "On 2 October 2024, the FIC intervened and placed a hold/freeze on Banxso's bank accounts, and on 14 October 2024, the NPA successfully applied for a preservation order."
In today's statement the FSCA confirmed that, on 8 November 2024, the High Court in the Western Cape Division "reconsidered" and set aside the preservation order.
However, the FSCA gave the following assurance: "The transfer of funds to an authorised financial services provider is required because Banxso's FSP licence remains withdrawn, and as a result Banxso cannot conduct any financial services business. Banxso itself cannot deal with the funds in the bank accounts that were preserved."
The FSCA stressed that Banxso "cannot lawfully conduct any financial services business or receive any deposits from clients for such purpose."
The FSCA further noted that it was a condition for a provisional withdrawal of Banxso's licence that it must transfer all its clients to an authorised financial services provider. "The FSCA is in discussions with Banxso to ensure an orderly transfer of clients".
Meanwhile, the FSCA confirmed that it was aware of allegations that Banxso is contacting clients and advising them that it (Banxso) 'has been cleared', that its licence has been reinstated, and that it may render financial services.
"The Authority has interviewed witnesses who have confirmed this and will investigate these allegations further."
The FSCA also confirmed that it was investigating statements from clients of Banxso who maintained that Banxso is continuing to conduct financial services business, notwithstanding the withdrawal of its licence. "The information received by the FSCA indicates that clients are encouraged to commit more funds to Banxso to recover losses made in trading."
In the latest statement, the FSCA further informed the public that an application for the liquidation of Banxso has been brought in the Western Cape High Court. "The Authority is cited as a respondent in the matter, and enquiries about the application should be directed the attorneys of record for the applicant in the matter, namely Mostert and Bosman. Enquiries can be addressed to pierred@mbalaw.co.za. The hearing of the liquidation application has been postponed to 4 December 2024.
In its comment, Banxso acknowledged the release by FSCA regarding allegations of its trading activities without a valid license. "We take these claims seriously and are currently investigating reports that some agents may have misrepresented our licensing status to clients, specifically asserting that our Financial Services Provider (FSP) license has been reinstated.
"We want to make it unequivocally clear that this is not the case, and any such statements are not endorsed by Banxso. We have communicated this matter to our approximately 200 employees and service providers, reinforcing our commitment to transparency and compliance."
Furthermore, Banxso confirmed that it was aware of the ongoing legal proceedings, including a court application for the liquidation of the company. "We are actively opposing this matter with a court date set for 4 December 2024."
In the interim, Banxso states that it is working "diligently" to facilitate all client withdrawals in accordance with the court order pending the release of funds from our banking partners. "We assure our clients that we are committed to honouring all withdrawal requests as soon as the funds are made available."
In his comment, verteran fraud investigator Bart Henderson expressed concern over the "lack of specificity" in the FSCA statement:
"Questions that immediately arise from the FSCA Press Release in relation to Banxso are, what authorised financial services provider will funds allow to be transferred into?
"Afrimarkets for instance is to all intents operating and appears 'cloned' from Banxso according to indications and reports.
"It appears from reports Afrimarkets is an 'authorised financial services provider' and is owned and operated by the same principles as own and operate Banxso? Will it be one of the authorised financial services providers that funds will be allowed to be transferred to?
"Will any 'authorised financial services provider' that funds will be allowed to be transferred to, be owned/operated/controlled by Banxso principles or their proxies?
"The FSCA's investigation into the activities of Banxso and its officers is ongoing. Does this investigation include current authorised financial services providers Banxso and its officers are associated with?
"But perhaps most importantly, in what can only be described as a transfer of assets, will 'investors' immediately have the luxury of being able to withdraw their funds in the event these are also still sitting in these frozen accounts?
"Notwithstanding this, one would assume, funds being transferred to this/these 'authorised financial services provider/s', involve funds derived from commercial agreements involving Banxso and their 'investors'. One would assume Banxso has entered into new individual commercial agreements with these clients to migrate their investment capital?
"Is Banxso being allowed to continue, albeit under a different guise? Is the question.
"As for 'authorised financial services provider', there appears a rather brisk trade in buying/selling companies 'off the shelf' with Financial Services Licences these days. One can make of that what they will. Suffice it to say this does not instil much confidence.
"Finally, I'm not sure how this 'transfer of funds' to another 'authorised financial services provider' while an application for the liquidation of Banxso has been brought in the Western Cape High Court will be viewed, or play out.
"Maybe I'm missing something here. Perhaps only some accounts will be transferred to another 'authorised financial services provider' not all/others?
"The FSCA press release lacks specificity.
"Sounds quite messy to me, but there you have it."
FSCA Press Release
Banxso response
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