DA leader Mark Burke's former company Kastelo targeted by SARB on crypto deals

A Johannesburg High Court ruling has kept the bank accounts of Kastelo, a crypto arbitrage firm founded by Democratic Alliance federal finance chairperson Mark Burke, frozen while the Reserve Bank investigates suspected exchange control breaches. Acting Judge S. Johnson dismissed the company's appeal and ordered it to pay SARB's costs on the rare punitive scale. SARB alleges Kastelo lent clients money to exploit offshore investment allowances, then kept most of the profit, with cross-border records suggesting contraventions above R4 billion. Kastelo disputes this and says it has voluntarily paused arbitrage services. Burke stepped down as chairman in February 2026 and denies any political funding link..By Jan Vermeulen.The Johannesburg High Court dismissed an appeal by Kastelo, a fintech and cryptocurrency arbitrage trading provider, seeking to unfreeze its bank accounts while the Reserve Bank investigates it.Acting Judge S. Johnson handed down a damning judgment, not only dismissing Kastelo’s application but also ordering costs on the punitive attorney-and-client scale.Kastelo was founded by Mark Burke, the Democratic Alliance‘s federal finance chairperson, who has been described as the smartest man in Parliament.He served as Kastelo’s CEO until June 2024. He handed the reins to Nicholas Burke after being called to Parliament following the 2024 national elections, but remained on as chairman.Kastelo’s bank accounts were frozen on 25 November 2025 on allegations that its crypto arbitrage trading service contravened South Africa’s Exchange Regulations.Crypto arbitrage is the practice of buying a cryptocurrency where it is cheaper and selling it where it is more expensive.Bitcoin is typically more expensive in South Africa than when buying from offshore exchanges in US dollars, which creates an “arbitrage gap” that traders can exploit.For arbitrage to be profitable, the gap must be large enough to cover the costs of transferring funds to the offshore exchange, purchasing the crypto, and transferring and selling it in South Africa.Profit margins are often small, and realising a substantial return on an arbitrage trade requires a large principal amount. Arbitrage traders also seek various ways to reduce costs to maximise returns.Kastelo was accused of circumventing exchange controls by offering customers bonuses for using their annual foreign investment allowances to purchase Bitcoin overseas and sell it in South Africa.It allegedly did this by lending customers the money to consume more of their annual allowance, and pocketing most of the profits for itself. However, Kastelo has disputed this characterisation.South African residents aged 18 or older can invest up to R11 million offshore per calendar year. This is broken up into a Single Discretionary Allowance (SDA) and Foreign Investment Allowance (FIA).The SDA has a R1-million threshold and only requires that the institution report the transaction. Accessing the R10-million FIA limit requires approval from the South African Reserve Bank (SARB).Obtaining permission to use the FIA allowance is relatively straightforward, which the High Court ruling said Kastelo facilitated.Kastelo faces Reserve Bank investigation.The Reserve Bank alleged that Kastelo lent clients money to use their allowances, creating suspected simulated transactions intended to circumvent exchange controls.Kastelo allegedly acted as a principal rather than merely an intermediary, controlled foreign-currency flows and failed to comply with requirements applicable to a Treasury Outsourcing Company.Cross-border records allegedly showed suspected contraventions involving at least R4 billion, while approximately R13 million was actually blocked.According to Johnson, Access Bank conducted its own independent forensic investigation and was obliged to report suspicious foreign exchange transactions.Its investigation found that some clients earning about R15,000 per month allegedly received loans of roughly R249,000, raising concerns about affordability and over-indebtedness.“Access Bank itself were considering off-boarding Kastelo because of the risks involved for them,” the judge said.As a result of the allegations, FinSurv is investigating Kastelo’s business model and transactions for suspected exchange-control contraventions, for which it issued the blocking order.Kastelo previously denied paying customers bonuses in exchange for access to their annual discretionary and foreign investment allowances.“This framing is false. Kastelo did not ‘exchange’ money for client allowances,” a spokesperson told MyBroadband in January.“Kastelo facilitates trades on behalf of clients in their own names and using their own allowances, generating a real-world profit in line with industry norms.”The company had commented on its previous attempt to overturn the freezing order through an urgent application, which was struck from the roll for lack of urgency.Following its most recent application, Judge Johnson ordered Kastelo to pay SARB’s costs on the punitive attorney-and-client scale. The Constitutional Court has described this scale as “extraordinary”.South Africa’s apex court said this scale should be reserved for cases where it can be found that a litigant conducted itself in a clear and indubitably vexatious and reprehensible manner.“Such an award is exceptional and is intended to be very punitive and indicative of extreme opprobrium,” it said.Kastelo said it has no ties to the DA.MyBroadband contacted the South African Reserve Bank (SARB), which declined to confirm whether it was investigating Mark or Nicholas Burke in their personal capacities.“The South African Reserve Bank has submitted an affidavit in relation to this matter, which is now before the court. The SARB will not be commenting further,” it stated.Mark Burke did not comment in his personal capacity. However, Kastelo provided feedback to MyBroadband’s questions..Read more:.Banks back in the dock: Rand manipulation saga lands in Constitutional Court.Kastelo explained that it instituted an application for review of the SARB’s actions in issuing the blocking order.“The High Court order addressed this narrow administrative matter: whether the SARB followed the correct administrative procedure in blocking a Kastelo bank account,” it stated.“It is important to note the court made no finding against Kastelo’s business activities, or on any alleged contravention of Exchange Control Regulations.”Regarding its next steps to unfreeze affected customers’ funds, Kastelo explained that SARB’s investigation would continue. Kastelo said that, to date, SARB had recorded no findings against it.“We respect the SARB’s oversight authority. Out of an abundance of caution, Kastelo has voluntarily paused its arbitrage services,” it said.“Kastelo continues to operate and remains focused on delivering compliant services to its clients, under its existing licenses and authorisations.”Regarding Mark Burke’s ongoing involvement in Kastelo, the company said he stepped down as chairman in February 2026.“While he retains an indirect interest in the group, he is no longer involved, either in an executive or non-executive role,” said Kastelo.“Mark Burke is not a party to the court proceedings, nor the subject of the SARB’s investigation. Kastelo has never provided funding, or any other benefit, for any political purpose or to any political party.”.This article was first published by MyBroadband and is republished with permission..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. 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DA leader Mark Burke's former company Kastelo targeted by SARB on crypto deals

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