South African regulator FSCA pursues 30 crypto firms operating without licenses – BitKE

The South African Financial Sector Conduct Authority (FSCA) is currently conducting 30 investigations into unauthorized cryptocurrency financial services in the country.

This follows the organization’s latest regulatory action report, which outlines the measures implemented to enable cryptocurrency businesses to operate safely.

“The Law Enforcement Division has set up an investigation team to deal specifically with individuals or entities that have not applied for a license or whose license applications have been rejected and who are conducting financial services in a manner that is not in compliance with the law. Currently, 30 cases are under investigation” indicated in the report.

“In the interests of protecting the public and promoting integrity in the industry, the FSCA will act decisively against illegal CASPs. The FSCA will disclose the results of its investigations and issue warnings if it discovers an unregistered cryptocurrency business.”

The regulator, which recently approved another 63 licence applications, bringing the number of licensed CASPs in South Africa to 138, noted that cryptocurrency exchanges in the country also facilitate scams, where fraudsters use multiple accounts opened with banks on cryptocurrency exchanges to avoid detection.

“Customers are often offered unrealistic returns, sometimes within hours of investing. Scammers share fake positive reviews and fabricated screenshots of returns in these groups. They showcase a wealthy lifestyle on social media and often ask for additional funds to process withdrawals.”

🇿🇦REGULATIONS | South Africa approves 63 new crypto license applications, bringing total to 138

“The total number of applications received to date is 383, of which five were rejected. A further 80 applications were voluntarily withdrawn by the applicants after… photo:twitter.com/uIXDCHBUGW

— BitKE (@BitcoinKE) July 3, 2024

The regulator notes that customers of financial institutions in the country are exposed to risks as fraudsters use increasingly advanced technologies.

“With the advent of artificial intelligence and rapid software development, the FSCA has observed an increase in deepfake scams. Fraudsters use AI and other technologies to create fake, high-quality videos, images, audio or text content that imitate public figures and successful businesspeople to promote fraud.”

In April 2024, as reported by BitKE, the FSCA launched an investigation into online trading platform BanxSo for “possible breaches of financial sector regulations” by fraudulently using the likenesses of well-known business figures such as billionaires Elon Musk and Patrice Motsepe in its advertising and promotional activities.

🇿🇦REGULATIONS | South African financial regulator, FSCA, launches investigation into online trading platform, Banxso

An investigation by the South African station found that people who interacted with Immediate Matrix ads and then registered on its platforms… photo:twitter.com/52CfoxLVDM

— BitKE (@BitcoinKE) April 22, 2024

In addition to unauthorized cryptocurrency-related financial services, other areas of increased risk for financial services customers in South Africa include:

Failure to comply with anti-money laundering regulations
Activities of an unlicensed OTC derivatives provider
Copy trades and signals

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