Explore the growing risks associated with online investment platforms and discover essential measures that both financial service providers and retail customers can take to safeguard their investments.
Image: File photo.
With the growing popularity of online investment platforms, spurred by advancements in digital financial services and the rise of crypto assets, the risk of exploitation of consumers and financial services providers (FSPs) has increased.
A recent case in point is Banxso, a Cape Town-based online trading group that, until recently, operated an online investment platform allowing consumers to purchase and sell financial products. On 4 July 2025, the Financial Sector Conduct Authority (FSCA) withdrew Banxso’s FSP license, following allegations of non-compliance with certain financial sector laws. The FSCA’s investigation was prompted by claims that customers were misled into investing via deepfake videos and social media advertisements featuring billionaire celebrities such as Elon Musk and Rupert Murdoch, purportedly endorsing Banxso.
These customers were directed to register via Immediate Matrix on Banxo's platform, a move Banxso claims occurred without its knowledge as a result of a “malicious attack”. Customers were then contacted by alleged Banxso agents promising substantial returns. While some initially earned profits, many subsequently suffered significant losses.
This article considers measures that FSPs and retail customers can take to protect themselves in the online investment space.
Steps FSPs and CASPs can take
FSPs and crypto asset service providers (CASPs) can reduce their exposure to risks through the following actions:
Despite these precautions, the risk of illicit use of an FSP's or CASP’s name or likeness remains. Vigilance and foresight are therefore essential.
Steps retail customers can take
Retail customers should take the following steps to guard against investment scams:
As a lay person, investment products and the world of online investment platforms can seem daunting. Dishonest conduct and precarious investment opportunities are becoming increasingly prevalent. It is important to exercise caution and consideration, and to know where assistance can be sought. Modern investment is evolving at a pace that outstrips the development of regulatory frameworks.
This makes it increasingly difficult to regulate newer, novel forms of investment and online platforms. Financial products are now more complex, and globalisation has opened markets beyond traditional geographical borders. There is also a growing cybersecurity risk, with customers and FSPs or CASPs facing threats such as scams, data breaches, and hacks. The measures outlined above can assist in safeguarding against improper and deceptive practices. In doing so, FSPs and CASPs can minimise their exposure to risks, and customers can better protect their hard-earned funds.
* Lamola is a partner and Memon is an associate at Webber Wentzel.
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