FSCA flags rogue crypto-currency dealers

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 23 Jun 2023

The Financial Sector Conduct Authority (FSCA) has issued a warning to members of the public about unauthorised crypto-currency firms – MultiFX Options and Digital Daily Return (DDR).

In a statement, the regulator says MultiFX and DDR are not authorised by the FSCA to provide financial products or financial services, and are, therefore, not authorised to sell investments or make recommendations in this regard.

This, after it come to the attention of the FSCA that MultiFX, DDR and its associates solicit crypto asset investments from the public using social media platforms.

It alleges they are using the name of prominent business leader Barry Silbert, founder and CEO of Digital Currency Group (DCG), to lure investors in an unauthorised manner.

New York-based DCG is Luno South Africa’s parent company.

ITWeb searched for MultiFX Options online and could not find its website. While DDR has a website, the company was unreachable because its “contact us” portal says: “Sorry, the page you are looking for could not be found.”

The FSCA warning comes as South Africans continue to lose their money through crypto-currency scams.

In May, IOL reported that Planet Mining Pool, which described itself as a leading global one-stop blockchain cloud mining platform, was accused by “investors” of scamming them out of “substantial” amounts of money.

It closed down its platform, leaving thousands of people devastated.

Last year, the US Commodities Futures Trading Commission (CFTC) charged South African resident Cornelius Johannes Steynberg in a Bitcoin fraud scheme case totalling $1.7 billion (R31.6 billion).

Steynberg allegedly created and operated, through Mirror Trading International, a global foreign currency commodity pool that only accepted Bitcoin to purchase a participation in the pool, with a value of over $1 733 838 372.

At the time, this action was the largest fraudulent scheme involving Bitcoin charged in any CFTC case.

Another case was Africrypt, which was allegedly hacked and investors lost billions of rands.

Amid these scams, the local crypto-currency industry recently formed the Crypto Asset Association of South Africa, and enforced a “code of conduct and ethics” in a bid to flush out bad actors from the sector.

FSCA points out that members of the public should always check that an entity or individual is authorised by the regulator to provide financial products and services, including for giving recommendations about how to invest.

“It is also important to know what category of advice the person is registered to provide, as there are instances where companies or people are registered to provide basic advice for a low-risk product and then offer advice on far more complex and risky products. Getting poor financial advice can bring severe harm to investors.”