Banxso will contest provisional liquidation order

The High Court in Cape Town on Friday granted a provisional winding-up order against online trading platform Banxso (Pty) Ltd.

Judge André le Grange issued a rule nisi calling for reasons why Banxso should not be finally liquidated on 17 October 2025.

The decision was based on allegations that Banxso engaged in fraudulent practices, which rendered its transactions with investors void under condictio ob turpem vel iniustam causam – a legal remedy for unjustified enrichment, used to reclaim money or property transferred under an illegal or immoral agreement.

Banxso issued a statement saying it firmly disagreed with the ruling and would urgently pursue all legal remedies, including appeals. “We will do everything necessary to secure a just and equitable outcome and prevent the dissipation of client funds,” it said.

The primary applicant, Carol Margaret Wentzel, a 60-year-old pensioner who retired in 2015, sought the winding-up of Banxso. Wentzel alleged she lost about R500 000, a substantial portion of her life savings, through investments in contracts for difference (CFDs) on Banxso’s platform.

Banxso (the first respondent) was a licensed financial services provider until the Financial Sector Conduct Authority provisionally withdrew its licence on 15 October 2024 and finally on 4 July 2025 (while the judgment was pending). The other respondents included the Financial Intelligence Centre, the FSCA, and the National Director of Public Prosecutions.

Ten intervening parties, alongside the Economic Freedom Fighters, sought leave to join the proceedings as co-applicants under section 346(1)(b) of the Companies Act.

The 10 intervening parties, all investors, claimed they had existing liquidated claims against Banxso for repayments of amounts deposited after the provisional withdrawal of Banxso’s FSP licence.

The EFF’s specific claims were not detailed in the judgment.

Main application

Wentzel’s application rested on three grounds. First, she argued that Banxso was unable to pay its debts as contemplated in section 345 of the Companies Act of 1973, read with item 9 of Schedule 5 of the Companies Act of 2008. Second, she contended it would be just and equitable to wind up Banxso under section 344(h) of the 1973 Act or sections 81(1)(c)(ii) and 81(1)(d)(iii) of the 2008 Act. Third, she alleged that Banxso’s operations were designed to perpetrate fraud or deception on investors, making it just and equitable to wind up the company

Central to Wentzel’s case was the claim that all transactions with Banxso were null and void under condictio ob turpem, because – according to Wentzel – Banxso operated as a criminal enterprise with an unlawful business model. She submitted that more than 7 000 investors, including the intervening parties, were defrauded, suggesting Banxso’s liabilities far exceeded its assets.

The intervening parties supported Wentzel’s application, arguing that Banxso’s offer to secure their claims was conditional on withdrawing the liquidation application, which could prejudice other investors.

The court granted the intervening parties’ application to join as co-applicants, finding they had a legally recognisable interest as creditors with prima facie claims, particularly for transactions after Banxso’s licence was suspended.

Banxso’s responses

Banxso opposed the application, describing it as an abuse of process, and denied insolvency and fraudulent operations.

It claimed to have more than R26 million in its operational account and offered security for Wentzel’s claim (R500 000) and the claims of the intervening parties (R57 125 588.80), which were rejected.

Banxso described itself as a “Straight Through Processor” (STP), acting as an intermediary between clients and offshore liquidity providers (LPs), which handled profit and loss reconciliation.

Banxso denied affiliation with the IM scheme, claiming IM operated parasitically on its platform. It said many complaints were not genuinely related to the IM scheme but were disgruntled clients who might have experienced a loss or another issue on the Banxso platform.

Banxso said it has paid out R67 574 002.47 worth of refunds, of which R14m was related to the IM scheme.

It employed internal call agents until April 2024, when the entire department was retrenched. Banxso said it has since used outsourced call agents, most of whom comply with its policies, do not provide financial advice, and do not employ high-pressure sales techniques.

Findings related to the IM scheme

Judge Le Grange’s said although Banxso denied there was an intention to benefit from the IM scheme, the evidence “overwhelmingly demonstrates that deposits into Banxso’s bank accounts increased significantly when the deepfake advertisements gained prominence”.

He said that irrespective of who was behind the IM scheme, it could not be disputed that Banxso “benefited enormously” through the onboarding of clients who were lured to its platform via the scheme.

The evidence indicated that Banxso “paid mere lip service to prevent its agents from onboarding clients lured through the IM scheme”.

The judge said: “Prima facie it has been established that prospective investors were contacted by Banxso agents, who fulfilled the commitments made by IM in the deepfake advertisements; Banxso agents contacted clients and confirmed that they were calling because the prospective clients showed interest in the IM product or in connection with the advertisements which featured the prominent persons; a high number of clients confirmed that they invested with Banxso because of the deepfake advertisements and undoubtedly, Banxso profited handsomely from their investments.”

There was also “no doubt” that agents gave investment advice to clients contrary to Banxso’s FSP licence.

The judge questioned Banxso’s undertaking to exercise better control over its agents, saying this was unlikely because most of them worked at outsourced call centres in foreign countries.

Issues surrounding Banxso’s business model

Judge Le Grange said Banxso’s denial that there was no co-mingling of funds, or that funds were used for personal and or business-related expenses, was not supported by the facts.

“Vast amounts of clients’ funds were transferred to interrelated bank accounts of Banxso. A disturbing feature in all of this is the [relatively] small amount of monies paid to investors in relation to their initial investment, whilst hundreds of millions of rands flowed through Banxso’s bank accounts to be converted into cryptocurrency,” he said.

Banxso said it would transfer money to FiveWest and Blockkoin, which would transfer the fiat money (into cryptocurrency) to Banxso’s LP. Judge Le Grange said this did not accord with the FSCA’s evidence that FiveWest and Blockkoin denied making payments to LPs. They said Banxso deposited or transferred fiat currency to them with the intention to purchase crypto assets (USDT). The USDT (Tether) was then transferred on the Blockchain to Banxso’s crypto wallets.

Judge Le Grange said this was “in stark contrast” to Banxso’s contention that “all trades are conducted with an offshore liquidity provider who acts as the counterparty and market maker in respect thereof”.

He expressed doubt over Banxso’s contention that any profits from client losses lay with its LPs. He expressed the opinion that Banxso performed all the functions of an LP despite the multiple offshore entities it listed as LPs.

He said Banxso acquired and transferred cryptocurrency to Flamingo Clearing House, a Comoros-registered company listed as one of the LPs, in the amount of R319 985 959 for the period 17 April 2023 to 29 December 2023. For the year 2024, a further R672 192 435 was transferred in this manner. “This equates to a handsome profit of just over R990m that were pocketed from the misfortunes of Banxso’s clients.”

The judge said it was “disturbing” that Banxso continued trading despite the suspension of its licence.

Banxso explained that “no live trading can take place, because there is no flow of funds between the client and counterparty to any CFD. Simply put, no profit or loss reconciliation can and/or has been done and, as such, no profit or loss allocation can be attributed to any client’s account. Any indication to the contrary, is merely a visual illustration and amounts to what can be regarded as a ‘simulated’ or ‘demo’ trading environment.”

Judge Le Grange said this explanation was “seriously worrying”, because it went “to the heart” of Banxso’s business model.

“What it shows is that Banxso’s clients were trading on a simulated or demo trading environment not knowing about it. These clients were therefore brought under a false pretence that they were doing live trading. The latter is nothing but a deception in the true sense of the word. The fact that monies may be paid back does not undo the deceptive conduct. Furthermore, according to Banxso, it determines the trading rates to make a profit. The question thus arises how Banxso did it in these circumstances if it was only a simulated training environment, as investors lost their initial investments,” he said.

‘Operating outside the law’

The court held that Wentzel and the intervening parties established a prima facie case under condictio ob turpem, satisfying the requirements of (i) a transfer of money, (ii) an illegal contract, and (iii) the defendant’s unjust enrichment.

“On a conspectus of all the evidence, I am satisfied that Wentzel has established on a prima facie basis that Banxso does not operate within the confines of the law, and its business model is illegal. It follows the refusal by Wentzel and the intervening parties to accept the provision of security via a stakeholder of Banxso cannot be seen as an abuse of process,” Judge Le Grange said.

Striking out applications

Both parties sought to strike out portions of each other’s affidavits under Rule 6(15) of the Uniform Rules of Court.

Two requirements must be met before a striking out application can succeed. First, the matter must be scandalous, vexatious, or irrelevant. Second, the court must be satisfied that if such a matter is not struck out, the party seeking such relief will be prejudiced.

Wentzel and the intervening parties sought to strike out parts of Banxso’s affidavits that accused their attorneys, Mostert & Bosman (M&B), of touting, colluding with the FSCA, and pursuing the liquidation for personal gain.

Banxso alleged M&B created a website to lure clients with promises of recovery, citing a newspaper article and an unrelated liquidation case. The court found these allegations unsupported, noting M&B acted on Wentzel’s instructions after she had lodged a complaint with Banxso, and the website was created to identify affected investors, not to solicit clients unlawfully.

Judge Le Grange deemed Banxso’s claims to be “reckless and offensive generalisations” that were scandalous, vexatious, and irrelevant, granting the striking out of certain portions of the affidavits.

Banxso sought to strike out parts of Wentzel’s replying affidavit, including FSCA interview transcripts and telephonic conversation records, arguing they constituted new matter, were unlawfully obtained via a subpoena duces tecum, and were scandalous or irrelevant.

Banxso claimed the FSCA breached confidentiality by providing the transcripts to M&B.

The court rejected these arguments, finding that the FSCA, a party to the proceedings, was legally obliged to comply with the subpoena under Rule 35(11). The court noted that Banxso used the transcripts in its defence, negating prejudice, and the new evidence responded to Banxso’s defences without creating a fresh cause of action. It dismissed Banxso’s application.

Click here to download the judgment.