Banxso scandal: How an investor lost almost half a million in only eight days

17 Nov 2024

Hundreds, possibly thousands, of people have lost huge sums of money after ‘investing’ in online trading company Banxso, which is now facing liquidation and whose trading licence remains suspended.

A recent application in the High Court in Cape Town calls for Banxso to be liquidated. The applicant, Carol Wentzel, is just one of hundreds of consumers who have lost money to the scheme, which positions itself as a trading platform.

Attorney Pierre du Toit of Mostert & Bosman notes that Wentzel is just one of many Banxso clients who responded to deepfake adverts and subsequently lost their money – they have never been offered refunds or settlements.

“The number of clients lured to Banxso through the deepfake advertisements is substantially more than the original group of 70 who lodged complaints with the FSCA [Financial Sector Conduct Authority],” Du Toit said in a supplementary founding affidavit.

The hearing of the liquidation application has been postponed to 4 December. Earlier this year, Daily Maverick reported that an investor had lost about R850,000 of her pension savings to a “scheme” after she saw that it was supposedly being promoted by Elon Musk.

The company concerned offered to pay her R600,000 to continue trading on its platform “provided she does not deal with the media or the ombudsman”.

It eventually paid her about R240,000 and has since told her it is working on “releasing” more funds. We can now reveal that the company involved was indeed Banxso.

Read more: Pensioner loses everything on embattled investment platform Banxso linked to deepfake ads

Manipulation, lies and loss

This week, we chatted to Claire Smith* (name changed for reasons of privacy). She tells a harrowing tale of how, as recently as September, she lost just more than R450,000 over eight days.

She had started trading on the EasyEquities platform, which gave her some confidence. “I did all my homework, checked them out carefully and was happy to invest,” she says. However, work was going through a lull, her partner was away in Durban for his own work, and she came across an advert supposedly featuring Elon Musk. She entered her details to receive more information.

“Within five minutes, I got a phone call from Mr Abrahams, who was incredibly convincing. He said the company had been trading for 20 to 30 years, there was zero chance of loss, and an adviser would hold my hand every step of the way,” she recalls.

She was dubious, but he was insistent, and by that afternoon she had made an initial deposit of R5,000. “He convinced me when he mentioned there was an office in Cape Town and I could come in at any time.” Then he said he would do it “right now” over the phone and directed her to create a pay link. That was on 17 September.

The next day she was contacted by a “success manager”, Oli, who reassured her that he would simply tell her when to put in and take out money.

She had seen some “profits” of R3,000, R4,000 and R8,000 on 18 September. On 19 September, Oli told her she was doing well, but to make more money she needed to deposit R50,000. Having seen the “success” of the previous deposit, she deposited R50,000 on 19 September. The cajoling, pressure, constant calls and promises of more returns continued in this vein for the next eight days.

Smith’s total deposits were as follows: 17 September, R5,000; 19 September, R50,000; 24 September, R100,000; 25 September, R100,000; and 25 September, R198,000.

"Go to the bank, get a loan, call a friend. It’s not my problem."

“This spiralled out of control over two days of … aggressive pushing to invest and invest. It was insane. Alex [one of Oli’s colleagues] and Oli pushed me. Alex called me on 25 September saying if I invested at least R100,000 more, he would be able to turn my money around and double it – and tomorrow I would be able to withdraw the deposit immediately once I had made all this money. And so, stupidly, I did as he suggested,” she says.

By 26 September, she realised things were out of control. She had no money left to put in. She received a call telling her to put in another R200,000, and when she said she had no money left, the response was: “Go to the bank, get a loan, call a friend. It’s not my problem.”

The day before, she had got in her car and driven to Banxso’s office in Cape Town. “There was nothing there, just a plaque. So, I go outside, and there’s just a security guard. He says no, there’s nobody here, you have to have a meeting.” At this point, a frustrated and terrified Smith responded that she was not moving until someone from Banxso called her. “Forty-five minutes later, Alex called and started shouting at me,” she recalls.

“What is your problem? Why are you there?” he barked at her. When she said the whole thing didn’t feel right and she wanted to withdraw her money, he replied: “No, that’s not how you go about it. I don’t know why you started trading in the first place, if you don’t know what you’re doing.”

Smith had emailed, WhatsApped and tried to phone. “There is nobody you can phone. Nobody replied to an email… And I just sent messages saying, please, I’m in over my head. I can’t do this. I can’t sleep. I’m nauseous,” she says. She reports that the whole episode was incredibly traumatic, and she started feeling suicidal, particularly as she still had to break the news of the loss of her entire life savings to her partner and her children.

Her story is not dissimilar to that of Wentzel, who has lodged the liquidation application. In her founding affidavit, Wentzel notes that she is owed about R500,000 and that Banxso has about 7,000 investors.

Based on their affidavits, it would appear that Banxso was running several bank accounts, as Smith made deposits into a Standard Bank account, whereas Wentzel deposited money into a Capitec account.

Licence suspension

The Financial Intelligence Centre placed a hold or freeze on Banxso’s bank accounts on 2 October, and the National Prosecuting Authority successfully applied for a preservation order on 14 October.

On 8 November, the Western Cape division of the High Court in Cape Town reconsidered and set aside the preservation order. However, the court ordered that Banxso should 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 (FSP) that is authorised by the FSCA. The transfer of funds to an authorised FSP is required because Banxso’s FSP licence remains withdrawn, and as a result Banxso cannot conduct any financial services business.

The FSCA issued a caution earlier this week to warn the public that Banxso’s licence remains withdrawn until further notice. The warning comes after the FSCA received allegations that Banxso is advising its clients that it “has been cleared”, that its licence has been reinstated and that it may render financial services.

Read more: FSCA warns public: Banxso's licence remains suspended as investigations continue

The FSCA says it has interviewed witnesses who have confirmed this and that it will investigate these allegations further. The FSCA is also investigating statements from Banxso clients who maintain that Banxso is continuing to conduct financial services business, notwithstanding the withdrawal of its licence.

The hearing of the liquidation application has been postponed to 4 December.

Banxso's response

Darren Hanekom of Hanekom Attorneys, who is representing Banxso, said the company “categorically denies the allegations of financial misconduct and improper practices. The company has always operated transparently and in compliance with regulatory requirements. We take these allegations seriously and are actively cooperating with relevant authorities to address any concerns.”

Hanekom says the claim that Banxso is involved in “deepfake advertisements” or misrepresentation is entirely unfounded. “Banxso has expended significant resources in investigating these allegations and moreover, instances where clients have been referred to the company through the Immediate Matrix scheme, and has actively attended to all clients that have been identified and/or affected.

“Nevertheless, we emphasise that Banxso does not engage in misleading advertising practices and is committed to ensuring that all marketing materials accurately reflect our services,” he said.

Banxso says it is limited in its response as the matter is sub judice before the court in Cape Town, but it is confident the forthcoming proceedings will clarify these issues.

If you have “invested” with or lost money to Banxso, please email [email protected] DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.

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Manipulation, lies and loss

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