The Financial Sector Conduct Authority (FSCA) has imposed administrative penalties exceeding R2 billion on online trading platform Banxso (Pty) Ltd, marking one of the largest fines in South African regulatory history. The enforcement action follows an extensive investigation that uncovered serious misconduct and systemic breaches of financial laws.
In addition to the corporate penalty, Banxso was fined an extra R16 million for further contraventions, while several directors and key individuals face combined fines of R35 million. The FSCA has also debarred these individuals for periods ranging from 10 to 30 years, effectively barring them from participating in the financial services industry.
Founded in 2021, Banxso positioned itself as a gateway for ordinary South Africans to access global trading markets. The platform offered services across Forex, stocks, indices, commodities, and cryptocurrencies, leveraging proprietary systems such as BanxsoX and AutoBanxso. Its rapid growth was fueled by high-profile sponsorships, including partnerships with Bafana Bafana and UFC champion Dricus du Plessis.
However, behind this aggressive marketing strategy, the FSCA found that Banxso engaged in practices that harmed clients and compromised the integrity of South Africa’s financial sector.
According to the FSCA, Banxso and its leadership:
- Misappropriated client funds
- Provided false and misleading information to both clients and regulators
- Promised unrealistic returns
- Failed to act in the best interests of customers
These actions violated multiple key statutes, including:
- Financial Sector Regulation Act
- Financial Advisory and Intermediaries Services Act
- Financial Institutions (Protection of Funds) Act
- Financial Markets Act Regulations
The FSCA emphasized that the scale of the penalties reflects the financial gains derived from unlawful conduct, the gravity of the misconduct, and its impact on clients and the broader financial system. The fines are intended to serve as a strong deterrent to other market participants.
The investigation also highlighted the role of AI-generated deepfake videos circulating online, falsely depicting prominent figures such as Elon Musk endorsing Banxso and promising high returns. Several clients reported joining the platform after viewing these videos, only to suffer significant losses trading Contracts for Difference (CFDs).
One investor, who claimed to have lost R500,000, even approached the courts seeking to have Banxso wound up.
As complaints mounted, the Western Cape High Court intervened. In August, Judge Andre le Grange placed Banxso under provisional liquidation, stating he was satisfied that the company’s business model was illegal. The FSCA’s findings now reinforce this position.
Given the severity of the misconduct, the FSCA has referred the matter to the South African Police Service (SAPS). The regulator will share all evidence gathered during its investigation and provide active assistance to law enforcement as required. In a statement, Banxso confirmed that it has engaged legal counsel and is “exploring all available mechanisms to address what we believe to be fundamental concerns with this outcome.”
