Thirty investigations into illicit financial services related to cryptocurrency are presently being conducted in South Africa by the Financial Sector Conduct Authority (FSCA). This is supported by the organization’s most recent regulatory activities report, which lists the safeguards in place to allow cryptocurrency companies to operate safely.

“The Enforcement Division formed an investigative team to focus on individuals or organisations providing illegal cryptocurrency financial services who either never applied for a licence or whose applications were turned down. According to the article, 30 cases are presently being looked at.

“The FSCA will take strong action against illegal CASPs in the interest of safeguarding the public and promoting industry fairness. If the FSCA finds unregistered cryptocurrency firm, it will publish warnings and disclose the results of its investigations.

In addition to facilitating scams, the regulator recently approved 63 more licence applications, bringing the total number of licenced CASPs in South Africa to 138. The regulator also pointed out that fraudsters are using multiple accounts opened at banks at crypto exchanges as part of their fraudulent activities to avoid detection.

“Illogical profits are frequently promised to clients, sometimes even hours after they make their investment. In these communities, scammers post fictitious screenshots of returns along with bogus favourable ratings. On social media, they present themselves as affluent, and they regularly ask for more money to cover their withdrawals.

The country’s financial customers are vulnerable to fraudsters’ use of more advanced technologies, according to the regulator.

“The FSCA has noticed an increase in deepfake frauds since the introduction of artificial intelligence and the speed at which software is developed. Fraudsters impersonate well-known personalities and prosperous entrepreneurs in phoney high-quality movies, photos, audio, and text content that they produce using AI and other technologies in order to spread schemes.

According to BitKE, the FSCA began looking into online trading platform BanxSo in April 2024 for “possible contraventions of financial sector laws” after the platform used falsely images of well-known businesspeople, including billionaires Elon Musk and Patrice Motsepe, in its advertising and promotional campaigns.

Apart from financial services linked to cryptocurrency that are not authorised, there exist additional domains where financial clients in South Africa are at increased risk:

• Non-compliance with anti-money laundering regulations
• Un-licenced over-the-counter derivative provider activities
• Copy trading and signals

Current crypto legislation state that organisations that continue operating without registering risk a fine of up to R10 million, a criminal conviction, and a 10-year prison sentence. The regulator is also ready to close down businesses that do not comply.