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FSCA investigation into Banxso intensifies amid allegations and data breach claims

FSCA investigation into Banxso intensifies amid allegations and data breach claims
Neesa Moodley
By Neesa Moodley
22 Jan 2025
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Banxso is pointing fingers at the FSCA for not giving them a heads-up before issuing a fraud warning, while the FSCA insists they were just trying to save the public from being scammed.

The Financial Sector Conduct Authority (FSCA) confirmed this week that its investigation into the activities of Banxso and its senior personnel is ongoing, and that the investigation has been prioritised.

The FSCA confirmation to Daily Maverick comes after online trading company Banxso levelled several serious allegations against the FSCA and attorney Mostert and Bosman, which is handling the liquidation application against Banxso, late last week. The Banxso statement was a response to a warning issued by the FSCA that consumers who had lost money to Banxso were apparently being further targeted by scammers. 

Read more: Duped Banxso investors targeted again by opportunistic scammers in an investment fraud chain reaction

After several media picked up on the story, Banxso issued a statement alleging that “at no point prior to issuing their warning notice did the FSCA make any attempt to contact us. This departure from the expected protocol is deeply concerning, as one would reasonably expect that for matters pertaining to our systems or our clients’ security, we would be the first point of contact. Instead, we were left to discover these allegations through their website and various media outlets, an approach that raises serious questions about the handling of this matter.”

However, the FSCA has firmly denied this. 

“It is not correct that the FSCA did not follow expected protocol in the publication of the public warning. The FSCA regularly publishes public warnings relating to possible fraudulent activities, including fraudsters who attempt to benefit from an FSCA investigation, in instances where the public may have been financially prejudiced. This often amounts to a claim that the fraudsters are able to assist the victims with recovering losses that they suffered in their investments. The FSCA issues these warnings to protect the public against the fraudsters,” the regulatory body told Daily Maverick. 

In the case of the Banxso warning issued a week ago, the FSCA said it received information from several different sources that there are individuals who claim to be able to assist persons who lost funds invested with Banxso. These individuals have claimed to be representing several entities including the FSCA, Financial Conduct Authority (UK), MetaTrader, and Elliptic. They further claimed that they were able to trace lost crypto assets ostensibly belonging to clients of Banxso. 

As these approaches to clients were clearly fraudulent the FSCA issued a warning as a matter of urgency. The media release was issued to warn members of the public who are being actively contacted as part of an ongoing fraudulent activity which (on an ongoing basis) creates material potential prejudice to clients and members of the public. The media release was issued in compliance with the FSCA’s statutory duties as inter alia contained in section 251 of the Financial Sector Regulation Act.

An important point is that the FSCA media release did not, in any way, suggest any leaks of information by Banxso or any association between Banxso and the scammers. 

Which makes Banxso’s vehement denial of any association seem like overkill. 

Banxso alleges data breach


Banxso has denied any data breach on its own website, but has rather pointed to an “unsecured website collecting sensitive client information for potential liquidators”.

“This website notably became operational immediately following the liquidation application launched by Mostert and Bosman, a timing that warrants scrutiny. In fact, a visit to the site generates the following security message: ‘Your Connection is not private. Attackers might be trying to steal your information from banxso.liquidations.africa (for example, passwords, messages, or credit cards). Learn more about this warning. net::ERR_CERT_DATE_INVALID’.” 

The company has alleged that this website harvests extensive personal and financial data including first name, surname, South African ID number, contact number, email address, total amount invested, total withdrawn, amount owed including profit, date originally invested, date of last payout, liquidator selection (H Bester or AW Van Rooyen), and additional information or comments. 

However, this claim does not align with information from consumers who have told Daily Maverick that they received unsolicited calls from people who have either claimed to be from Banxso itself or have posed as recovery agents from a company called CertiK. CertiK has denied any involvement. 

“We do not ask for money or any currency/cryptocurrency or personal wallet information, credit card information or any other type of payment in unsolicited emails or other communications. We do not perform wallet recovery or similar services. CertiK does not solicit wallet recovery services from victims of fraud and any communication related to such services by CertiK is fraudulent and/or a scam,” said CertiK.

Banxso goes on to allege that the unsecured platform is operated by Peddy Tech under Craig Pederson, who owns TCG Forensics and The Computer Guyz. 

Pedersen has also denied Banxso’s claims. In a statement shared with Daily Maverick via Mostert and Bosman, he said: “Quite contrary to the Banxso press release, the site is actually very well secured and subject to regular penetration testing,” he said. Pedersen explained that the error message was a server certificate issue, as the certificate was nearing expiry. It has since been updated.

“These errors are quite common and not indicative in any way of a breach. We have inspected the log files and there is no indication of a breach… and find the Banxso technical understanding of a browser-generated error message somewhat amusing,” he said. 

Pedersen pointed out that there was no “harvesting”. 

“User data is input post-registration on the site and only by those who actively choose to register on the site. The user data is not stored on the website and can therefore not be ‘harvested’ by ‘hacking’ the website,” he said. 

Hold on Banxso bank accounts


The FSCA has also reaffirmed that several banks are currently maintaining a hold on funds in bank accounts in the name of Banxso. The FSCA engaged Banxso on the issue and it was agreed that the hold will be maintained until certain aspects of the case have been finalised. 

In terms of the Western Cape Division of the High Court order dated 18 December 2024 relating to the application for the liquidation of Banxso, the freeze on certain of the bank accounts was agreed to between the applicant, the intervening parties and Banxso. This effectively means anyone claiming to be from Banxso and offering to “refund” monies to former clients would be lying. DM

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