Latest news with #Banxso
IOL News
6 days ago
- Business
- IOL News
The Liquidation Cartel: How MTI's R450 Million Vanishing Act Previews Banxso's Fate
With Judge Le Grange's ruling imminent, Banxso clients fear a repeat of the MTI disaster, where the legal system prioritises profits over justice, leaving ordinary South Africans in financial despair. Image: IOL / Ron AI The stage is set for another potential South African liquidation tragedy. As creditors wait for Judge Le Grange to deliver judgment in a case that could seal the fate of thousands of Banxso clients the anxiety amongst clients is growing. The precedent is terrifying: Mirror Trading International creditors have waited four years for a single cent while liquidators Bester and Van Rooyen have pocketed millions each, and law firm Mostert & Bosman extracted nearly R25 million in fees. Now the same players are circling Banxso, having already rejected a R57 million settlement that would have guaranteed 100% creditor payouts to the liquidation applicants. The message is clear: why settle for full creditor recovery when prolonged liquidation proceedings generate far more lucrative professional fees? How R1.1 Billion Became R627 Million The Mirror Trading International collapse exposes the brutal mathematics of South Africa's liquidation industry. When liquidators recovered 1,280 Bitcoin worth approximately R1.1 billion in 2021, creditors held hope for meaningful recovery. Four years later, the estate has mysteriously shrunk to R627 million, leaving R450 million spent and not a single creditor payment made. The June 2023 liquidation and distribution account reveals the shocking scale of professional extraction. From an estate balance of R803 million at the time of the report being published there was already an amount of around R297,000,000 spent over two and a half years, eight liquidators claimed R138.5 million in fees while creditors received nothing. Masters' fees consumed R275,000, with the South African Revenue Service claiming a staggering R283 million. The remainder has vanished into legal fees and administrative costs, yet not one cent has reached the victims whose investments funded this professional feast. The mathematics of destruction become even more damning when considering lost investment returns. The R1.1 billion recovered in 2021 should have generated substantial interest over four years of liquidation proceedings. Conservative investment returns of 8% annually would have added over R400 million to the estate. Instead, the current R627 million balance suggests this potential growth has also vanished into the professional fee vortex, representing another layer of value destruction that creditors will never recover. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. 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Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ The disappearing funds tell a damning story. Administrative costs have consumed the estate like acid through metal, devouring not only the principal amount but the investment returns that could have significantly improved creditor recoveries. Professional fees flow freely while creditors subsist on empty promises. The Western Cape High Court declared MTI an unlawful Ponzi scheme in 2023, yet the only people profiting from this designation are the very professionals appointed to serve victim interests. Most cruelly, liquidators promised creditors a second liquidation and distribution account in 2024 that would finally deliver payments. Industry whispers suggested a special dividend of 10 cents per rand of claimed amounts. That promise evaporated with silence taking its place as many creditors now bemoan the lack of transparency and non-existent communications on the matter from the liquidators, leaving creditors with nothing but the bitter taste of false hope while professional fees continued accumulating. A senior insolvency practitioner, speaking anonymously for fear of industry retaliation, revealed the ugly truth: "This has become the perfect legal heist. You seize control of massive estates, generate astronomical fees through manufactured complexity, drag proceedings across years, and by the time creditors realise the con, their money has been professionally laundered into legal accounts." Banxso, The Sequel Nobody Wanted History repeats with mechanical precision in the Banxso liquidation. When stakeholders offered R57 million in security to guarantee full creditor payouts for the liquidation applicants, Mostert & Bosman rejected the proposal without hesitation. The law firm allegedly withheld news of this settlement from clients, who discovered the offer through media reports rather than their supposed legal representatives. Judge Le Grange himself highlighted the matter during the application hearing remarking that it made no sense for a creditor to turn down a 100% offer in favour of long, drawn out and expensive legal proceedings that would surely end up with the same alleged creditor receiving 10 – 15 cents on the Rand in a best-case scenario. A forensic accountant with two decades of corporate insolvency experience explained the perverse dynamics: "These liquidations have transformed into wealth destruction machines. Not only do they consume principal through manufactured legal complexity, but they obliterate the investment returns that should compound over time. The R1.1 billion recovered in 2021 could have grown to R1.5 billion through conservative investments. Instead, it has shrunk to R627 million while generating massive professional fees. This represents systematic value destruction disguised as estate administration." Judge Le Grange raised pointed questions during May hearings about a website promoting Bester and Van Rooyen as preferred liquidators before the application had even been heard by the courts, asking directly and not receiving any substantial answer as to why this would not constitute touting in its worst form. The coordination suggests an orchestrated campaign that may violate professional conduct standards. A Verdict That Could Doom Thousands Judge Le Grange faces a critical decision that will determine whether Banxso clients receive their funds or feed the liquidation machine. The contrast could not be starker. Approving forced liquidation consigns clients to the MTI fate: years of waiting while professionals extract maximum fees from dwindling assets. The human cost of this decision extends far beyond financial statements. Banxso clients represent ordinary South Africans whose savings, retirement funds, and family security hang in the balance. One investor, who invested R150,000 captured the desperation: "If Banxso wins its case, I can access my money immediately. These liquidators see only the profits they can make from forcing this liquidation through, regardless of what happens to us." An MTI victim whose pension fund vanished into legal fees painted the horrific reality: "Four years of watching lawyers grow rich while I struggle with rent payments. They stole our money twice, first the original scammers, then the professionals meant to protect us. The system is designed to destroy creditors." David Versus the Legal Goliath Unlike MTI's passive collapse, Banxso stakeholders have mounted unprecedented resistance against regulatory and legal pressure. While most companies capitulate when faced with FSCA action, Banxso directors are challenging the regulator at every turn, including now preparing to take the authority to tribunal to overturn the final removal of their Financial Services Provider licence. This defiance represents more than corporate stubbornness. Banxso management recognises that surrendering to the liquidation cartel means abandoning their clients to systematic wealth extraction by professional services. Their R57 million settlement offer, which excluded the large sums held under court order in their bank accounts, demonstrates genuine commitment to creditor protection rather than capitulation to legal machinery designed to enrich lawyers and liquidators. A retired commercial lawyer with 40 years' experience described Banxso's resistance as extraordinary: "Most companies fold immediately when liquidation proceedings begin because fighting the system is expensive and usually futile. Banxso's willingness to challenge both the FSCA and liquidation applicants shows they understand what their clients face if this process continues." The company's tribunal challenge against the FSCA represents a broader fight against regulatory overreach that enables liquidation abuse. By freezing Banxso funds while failing to enforce court orders for their release, the FSCA created the perfect environment for professional fee accumulation at creditor expense. The Professionals Always Win Industry insiders describe a deliberate methodology perfected through countless liquidations. Early settlement offers that benefit creditors face immediate rejection. Proceedings stretch across years through manufactured legal complexity. Friendly professional services receive appointments to maximise fee extraction. Estate assets disappear through administrative costs while creditors receive blame for poor market conditions affecting recovery rates. The pattern extends beyond individual cases into systemic dysfunction. South Africa's liquidation framework has evolved into a sophisticated mechanism where liquidators receive guaranteed payment regardless of creditor outcomes, law firms bill unlimited hours with minimal oversight, administrative costs consistently exceed creditor recoveries, and settlement offers threatening fee income face automatic rejection. The R450 Million Question As judgment approaches, the MTI precedent looms like a financial death sentence. The R450 million that vanished from MTI's estate represents more than accounting irregularities or market volatility. It demonstrates how professional fees can consume entire estates while creditors wait indefinitely for justice that never arrives. A bankruptcy specialist summarised the brutal reality: "This is not incompetence or unfortunate circumstances. It represents a refined business model where creditor suffering generates professional prosperity. The longer estates remain in liquidation, the more fees accumulate. Quick resolutions are bad for business." Justice or Professional Jackpot? Judge Le Grange holds extraordinary power. His decision will either deliver justice to Banxso clients through immediate settlement acceptance or condemn them to the liquidation lottery that has already claimed MTI creditors. The choice represents far more than legal procedure. It determines whether South Africa's courts serve creditor interests or enable professional wealth extraction. The evidence is overwhelming. Banxso stakeholders have fought regulatory pressure, challenged FSCA overreach, and offered complete creditor protection through guaranteed settlement funds. They have demonstrated unprecedented commitment to client welfare in a system designed to sacrifice creditor interests for professional profit. Mostert & Bosman and their preferred liquidators offer the MTI template: years of proceedings, millions in fees, and zero creditor recovery. The Final Reckoning Judge Le Grange's judgment will echo far beyond Banxso. It will signal whether South African courts recognise the liquidation cartel's systematic abuse of creditor rights or enable continued professional profiteering disguised as legal process. Judge Le Grange faces a choice between creditor protection and professional enrichment. The question haunting thousands of Banxso clients is simple: will Judge Le Grange deliver justice or feed the liquidation machine that transforms creditor suffering into professional prosperity? The answer will determine whether South Africa's liquidation system serves justice or perpetuates the most profitable legal scam in the country's history.
IOL News
31-07-2025
- Business
- IOL News
Navigating online investment platforms
Explore the growing risks associated with online investment platforms and discover essential measures that both financial service providers and retail customers can take to safeguard their investments. With the growing popularity of online investment platforms, spurred by advancements in digital financial services and the rise of crypto assets, the risk of exploitation of consumers and financial services providers (FSPs) has increased. A recent case in point is Banxso, a Cape Town-based online trading group that, until recently, operated an online investment platform allowing consumers to purchase and sell financial products. On 4 July 2025, the Financial Sector Conduct Authority (FSCA) withdrew Banxso's FSP license, following allegations of non-compliance with certain financial sector laws. The FSCA's investigation was prompted by claims that customers were misled into investing via deepfake videos and social media advertisements featuring billionaire celebrities such as Elon Musk and Rupert Murdoch, purportedly endorsing Banxso. These customers were directed to register via Immediate Matrix on Banxo's platform, a move Banxso claims occurred without its knowledge as a result of a 'malicious attack'. Customers were then contacted by alleged Banxso agents promising substantial returns. While some initially earned profits, many subsequently suffered significant losses.
IOL News
07-07-2025
- Business
- IOL News
Banxso's Final Stand: The Fight the FSCA Never Saw Coming
Banxso faces a legal battle against the FSCA after its licence withdrawal, raising questions about regulatory fairness in South Africa's financial sector. Image: IOL / Ron AI The Financial Sector Conduct Authority's licence withdrawal may have marked the end of one chapter, but it has unleashed a legal tsunami that will expose the regulator's double standards and procedural failures in ways they never anticipated. The gloves are off. After months of what industry insiders describe as "procedural persecution" at the hands of the FSCA, Banxso (Pty) Ltd has seen its licence officially withdrawn. But if the regulator thought this would be the end of the story, they have gravely miscalculated the tenacity of the opponent they've chosen to fight. The final notice, dated July 4, 2025, represents more than just another regulatory scalp. It's the culmination of what compliance experts are calling the most controversial enforcement action in South African financial services history, one that has exposed gaping holes in the FSCA's credibility and raised fundamental questions about regulatory fairness. The Fatal Error of Good Faith What makes this case so explosive is not what Banxso did, but what it didn't do. This is not a company caught red-handed defrauding clients. This is not a firm that stonewalled investigators or refused to compensate alleged victims. This is a business that made the fatal error of cooperating with authorities whilst its competitors perfected the art of regulatory camouflage. The facts are stark and damning for the FSCA: • Banxso voluntarily refunded over R14 million to clients affected by sophisticated deepfake scams; • The company proactively upgraded its compliance systems and hired external forensic specialists; • It self-reported issues to the regulator and participated fully in investigations; • No clients lost money due to company malfeasance – only to the same AI-powered scams plaguing the entire industry with the company taking on the loss through refunds to their clients. Yet for this cooperation, Banxso has been handed a corporate death sentence. "They have been punished for transparency," a senior industry source stated "Whilst they were busy fixing problems and protecting clients, other firms were perfecting the art of regulatory hide-and-seek. Guess who's still operating today?" Video Player is loading. 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Advertisement Next Stay Close ✕ Ad loading The Regulator's Miscalculation The FSCA's decision reflects a fundamental misreading of their opponent. Sources close to the matter suggest the regulator expected Banxso to fold quietly, perhaps issue a muted statement, and fade into regulatory obscurity. Instead, they have awakened a legal adversary with the resources and determination to fight this battle in every available forum. "The FSCA clearly didn't anticipate the tenacity of the dog they picked a fight with," said one legal expert familiar with the proceedings. "They thought they were dealing with a compliant corporate citizen who would accept their fate. What they got was a company with nothing left to lose and everything to prove. Sometimes honour is worth more than most can put a price on" Banxso's official response, issued simultaneously with the FSCA's notice, makes clear this is not a company preparing for surrender: "We are disappointed by the FSCA's decision, which in our view does not reflect the substantial engagements with and representations to the FSCA, together with the material improvements made to our systems and compliance frameworks," said a Banxso spokesperson. "Banxso remains committed to the highest standards of client care and regulatory integrity, and will engage the available legal avenues to fully ventilate and defend its position." The Contrast That Damns The timing of this enforcement action becomes even more controversial when viewed alongside the FSCA's apparent inaction against other market participants. Whilst Banxso faces extinction for cooperating with authorities, other licensed entities allegedly linked to systematic fraud operations continue to operate with apparent impunity. "It's beyond comprehension," said one senior compliance officer. "You have companies that built their entire business models around systematic fraud, and they're untouchable. Meanwhile, the firm that actually tried to do the right thing gets wiped out. What message does that send to the industry?" The message appears clear: cooperation is dangerous, transparency is toxic, and in the FSCA's world, the reward for good faith is professional execution. The Human Cost Whilst the legal battle rages on, the human cost continues to mount. Banxso's 186 employees, many of them young South African professionals who chose to build their careers in the domestic fintech sector, now face an uncertain future. Thousands of client accounts remain in limbo due to the FSCA's administrative stranglehold. The broader industry is watching nervously. If the FSCA can destroy a cooperative company like Banxso whilst ignoring systematic fraud elsewhere, what protection do any of them have? The Bigger War This fight transcends Banxso's corporate survival. It has become a battle for the soul of South African financial regulation. At stake is whether the country will have a predictable, fair, and competent regulatory system, or whether it will continue to operate under a regime where cooperation is punished and obfuscation is rewarded. "This is bigger than one company," said a prominent financial services lawyer. "This is about whether South Africa can maintain its reputation as a serious financial centre. International investors are watching this case very carefully." The company's determination is evident in their closing statement: "It is Banxso's sincere belief that a full, fair, and independent review of the relevant facts will ultimately support the Company's position."
Mail & Guardian
07-07-2025
- Business
- Mail & Guardian
Financial watchdog revokes Banxso's licence
The Financial Sector Conduct Authority (FSCA) has revoked the financial services provider licence of Banxso, marking an escalation in its regulatory action after receiving consumer complaints about the business. The Financial Sector Conduct Authority (FSCA) has revoked the financial services provider licence of Banxso, marking an escalation in its regulatory action after receiving consumer complaints about the business. However Banxso, which offers investments to the public via online trading platforms, said in a statement that it intends to mount a legal challenge to the financial watchdog's decision. The final withdrawal, following a provisional suspension on 15 October 2024, was confirmed after the FSCA reviewed preliminary investigation findings and Banxso's submissions, the financial watchdog said on Friday. 'The FSCA is of the view that 'The investigation findings included that Banxso, inter alia, misappropriated client funds, provided false and/or misleading information to clients and to the FSCA, and did not act in the best interests of clients.' The matter relates to a deepfake controversy which erupted last year with allegations that Banxso profited from deceptive ads featuring public figures like Elon Musk, Johann Rupert and The company disputed the FSCA's decision, saying it would be exercising its full right of recourse under the Financial Sector Regulation Act, including applying for reconsideration before the Financial Services Tribunal. 'The company is also undertaking a comprehensive legal review of the procedural and factual aspects underpinning the FSCA's decision. We are disappointed by the FSCA's decision, which in our view does not reflect the substantial engagements with and representations to the FSCA, together with the material improvements made to our systems and compliance frameworks,' it said. Banxso said it remained 'committed to the highest standards of client care and regulatory integrity and will engage the available legal avenues to fully ventilate and defend its position'. The company said it would rely on its legal team, including senior counsel and regulatory experts, to challenge the FSCA's decision through the appropriate statutory channels. 'The company's legal response will be rooted in both procedural fairness and the factual merits of its case. The company remains fully committed to transparency and stakeholder engagement as the matter progresses,' Banxso said, adding that it was 'particularly mindful' of the economic and operational consequences of the decision. 'These include potential impacts on its 186 employees, downstream service providers and thousands of clients. It is Banxso's sincere belief that a full, fair and independent review of the relevant facts will ultimately support the company's position,' Banxso said. The FSCA said it had also provisionally withdrawn the licence of AfriMarkets Capital. 'The FSCA has taken this step because it is concerned that there may be a risk of harm to clients and/or the general public if AfriMarkets continues its operations as a financial services provider. The provisional withdrawal is based on preliminary investigation findings regarding the activities of AfriMarkets and its possible association with 'The FSCA is amongst others also concerned about the apparent aggressive and pressurised sales techniques used by AfriMarkets agents when selling financial products to clients, promises of unrealistic returns, the failure to conduct the required risk and needs analyses prior to placing clients in specific financial products, and material losses suffered by clients.' The consequence of the provisional withdrawal is that AfriMarkets is unable to conduct any further financial services business or receive any additional funds from its clients, the watchdog said. 'The FSCA emphasises that this is a provisional withdrawal of AfriMarkets' license based on provisional investigation findings. Once the investigation is finalised, the FSCA will consider the investigation and any submissions by AfriMarkets. In the interim, AfriMarkets has been provided with an opportunity to provide reasons why the provisional withdrawal should be lifted or not made final.' The FSCA said AfriMarkets and Banxso are 'linked through common directorships and key persons and conducted their financial services business in a very similar manner'. However, AfriMarkets, reacting to the provisional withdrawal of its licence, distanced itself from Banxso. AfriMarkets said its banking partners had notified it that some of its accounts had been temporarily restricted 'pursuant to what is presently believed to be a directive issued under section 34 of the Financial Intelligence Centre Act, 38 of 2001'. 'We are advised that such restrictions are only valid for a period of 10 days, pending further developments. Despite this, no formal notice has been received, articulating the basis of this intervention,' it said. It had also been informed that its licence had been provisionally withdrawn by the FSCA, pending the finalisation of its investigation. 'Notwithstanding, however, to date, no formal, nor final findings have been made against AfriMarkets, and we are actively engaging with the relevant regulators in relation to their respective investigative processes. AfriMarkets has not been provided with any indication that these events are interlinked,' the company said. 'Whilst we are still in the process of seeking clarity on these invasive measures, we are engaging senior legal counsel to consider all available remedies, in order to protect the interests of our clients and stakeholders.' It had 'consistently sought to uphold its regulatory obligations and remains committed to cooperating with the authorities, in the spirit of transparency and good faith'. 'We are also aware of commentary in the public domain suggesting a potential association between AfriMarkets and Banxso. For the avoidance of doubt, whilst there may be certain overlapping stakeholders, AfriMarkets and Banxso are, and have always been, distinct legal and operational entities. There are no shared platforms, client accounts or regulatory operations between the two.' Banxso chief executive Manuel de Andrade has previously told the Mail & Guardian that 'Banxso has no connection or involvement in any deepfake ads that may exist on the internet'. The company maintained it monitored its marketing and adhered to regulations, framing itself as a target of unauthorised third-party actions. The provisional withdrawal of AfriMarkets' licence initially barred both entities from conducting financial services or accepting new funds. 'The consequence of the provisional withdrawal is that AfriMarkets is unable to conduct any further financial services business or receive any additional funds from its clients,' the FSCA said, adding that it would update the public in due course on any further decisions.
IOL News
05-07-2025
- Business
- IOL News
Banxso and Afrimarkets to challenge FSCA findings at the Financial Services Tribunal
Banxso and Afrimarkets, two leading fintech firms in Cape Town, are navigating significant regulatory challenges as the FSCA withdraws their licences. Image: FSCA Two prominent Cape Town-based fintech companies, Banxso (Pty) Ltd and Afrimarkets (Pty) Ltd, have issued responses following recent regulatory and banking developments that have impacted their operations. Banxso confirmed the final withdrawal of its financial services provider licence by the Financial Sector Conduct Authority (FSCA), as per a notice issued on 4 July 2025. The FSCA stated that Banxso had contravened various financial sector laws and no longer met the requirements to be a fit and proper financial services provider. Key findings included allegations of misappropriation of client funds, providing false or misleading information to both clients and the FSCA, and failing to act in clients' best interests. Improvements were made! In response, the company has strongly contested the FSCA's findings and announced its intention to challenge the decision through the Financial Services Tribunal and other statutory legal avenues. Banxso emphasised that it has significantly enhanced its systems and compliance frameworks and will pursue a legal strategy grounded in both procedural fairness and factual evidence. 'We are disappointed by the FSCA's decision, which in our view does not reflect the substantial engagements and improvements made. Banxso remains committed to the highest standards of client care and regulatory integrity,' according to Sean Newman, the company's spokesperson. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Afrimarkets wants clarity Meanwhile, Afrimarkets has faced temporary banking restrictions believed to be the result of a directive issued under section 34 of the Financial Intelligence Centre Act. The FSCA said that the provisional withdrawal is based on the findings of their preliminary investigation regarding the activities of Afrimarkets and its possible association with deepfake advertisements. The FSCA is also concerned about the apparent aggressive and pressurised sales techniques Afrimarkets agents use when selling financial products to clients. These restrictions, which affect certain accounts, are understood to be limited to a 10-day period. Simultaneously, the FSCA has provisionally withdrawn Afrimarkets' licence pending the outcome of an ongoing investigation. Afrimarkets said it had received no formal findings or specific allegations and is actively engaging with regulators. 'We are seeking clarity on these measures and are working closely with senior legal counsel to consider all available remedies to protect our clients and stakeholders,' Newman said, adding that all client funds remain secure and steps are being taken to urgently resume operations.
