The Scapegoating of Banxso: How Regulatory Overreach Missed the Bigger Picture

In what appears to be a clear case of regulatory tunnel vision, Banxso remains in the crosshairs of South African financial regulators, while an entire ecosystem of deceptive affiliate marketers and trading platforms continues to operate with relative impunity. Instead of tackling the root problem—an unregulated network of third-party marketers exploiting social media and celebrity endorsements to mislead investors—the FSCA has disproportionately targeted one entity: Banxso.

Banxso’s regulatory ordeal began with the suspension of its licence by the FSCA, triggering costly legal battles and severe reputational damage. Yet, as evidence continues to surface, it becomes increasingly apparent that the marketing tactics at issue are widespread across the sector—not unique to Banxso.

Recent investigations have uncovered that Trade FT, operating under FSP number 53871, is linked to Grand Trading Pty Ltd. The individuals behind these entities previously operated under the name Asterix Data and have a well-documented history of rebranding and shifting identities within what’s been referred to as the 'Scam Empire' a network that includes Finbok and other flagged entities.

Despite their consistent use of deceptive AI-themed advertisements featuring unauthorised images of celebrities like Patrice Motsepe, Elon Musk, and Trevor Noah, these firms have not faced equivalent regulatory scrutiny.

This raises a critical question: why has Banxso been singled out while others using the same misleading marketing tactics continue to operate freely?

“What we're seeing is a classic case of making an example out of one company while failing to address the systemic issues,” said an industry insider who spoke on condition of anonymity. “Banxso has become the convenient scapegoat in a situation that clearly involves dozens of market participants.”

These celebrity-endorsed AI ads act as a gateway into the broader problem. A single click on one of these ads floods users with unsolicited calls from various South African trading companies—none of which are connected to Banxso. This indicates the involvement of an aggressive affiliate marketing network, which is largely unregulated and responsible for generating deceptive leads across the industry.

Importantly, the FSCA’s own registry reveals glaring red flags about Trade FT: there are no registered Key Individuals listed for its FSP number. In any other instance, this would typically trigger immediate enforcement action. Yet, despite the entity's lineage and irregularities, it continues to operate, untouched.

Meanwhile, Banxso is the only firm in the industry to have voluntarily refunded R14 million to affected consumers in the wake of the scandal—a step no other trading company has taken, despite similar marketing exposures.

“The FSCA has created a false narrative that this is about one bad actor when it’s clearly an industry-wide marketing issue,” said a second compliance expert with deep experience in South African financial services. “Operations like Trade FT continue unabated, using identical tactics. Yet Banxso is being paraded as the poster child for enforcement.”

This disparity in enforcement undermines the credibility of the FSCA’s regulatory objectives. If the aim is truly to protect consumers, why focus enforcement on a compliant FSP that has shown a willingness to rectify issues, while letting a complex web of non-compliant and identity-shifting entities off the hook?

“There’s a fundamental unfairness when one company bears the full regulatory burden while others benefit from the same marketing channels without scrutiny,” added the first industry source. “If the FSCA truly wants to protect consumers, they need to address the underlying marketing ecosystem rather than targeting individual FSPs.”

The situation is especially concerning given how easily these deceptive ads continue to reach South Africans online. Despite the regulatory action against Banxso, the same misleading advertisements are still well and truly thriving in their absence.

In response to inquiries about the issue, the FSCA stated:

“In terms of section 251 of the Financial Sector Regulation Act No.9 of 2017 (FSR Act), the FSCA is unable to disclose the details of the investigation relating to Asterix.”

This response only deepens concern over the transparency and fairness of the process. The lack of visible enforcement against the real drivers of consumer deception—the affiliate marketers and identity-hopping entities like Trade FT—suggests that the FSCA may be prioritising symbolic enforcement over meaningful consumer protection.