As yet another cryptocurrency scam is investigated in South Africa, the director of investigations and enforcement at the financial watchdog warned consumers to stay away.
“In my opinion, anything to do with a crypto is highly suspect and nobody should be invested in anything form of cryptocurrency or any of the products that go with it,” the Financial Sector Conduct Authority’s Brandon Topham told a media briefing on Wednesday.
While the boom in cryptocurrencies has somewhat abated in the past two years amid a slump in prices, South Africans are still trading in these currencies, which remain unregulated.
But many have lost money, and most recently the FSCA issued a warning about Mirror Trading International, which accepts clients’ funds in the form of Bitcoin, which are then used to trade foreign currencies. MTI claims to have more than R2.9 billion in clients’ funds in trading accounts, but the FSCA says it has not been able to “conclusively confirm” that the funds exist.
In another recent cryptocurrency scam, 2,000 investors lost R277 million by “investing” in VaultAge Solutions, which purchased cryptocurrency on their behalf.
“It’s extremely high risk,” Topham said, equating “playing” in cryptocurrencies with gambling. But he said that those who are interested in cryptocurrency should “rather go to the casino” – because at least gambling establishments are regulated and registered in South Africa.
There’s currently no protection for South Africans who buy cryptocurrencies.
And cryptocurrency itself will probably never be regulated in South Africa, Topham said. Still, the authorities are working towards regulating the services relating to cryptocurrencies.
Earlier this year, the FSCA, the Reserve Bank and other parties published a policy paper about plans to regulate service providers in the cryptocurrency industry, including trading platforms, providers of vending machines, issuers of cryptocurrencies or tokens, providers of investments or derivatives of crypto assets, digital wallet providers, and providers of custody services.
Caroline da Silva, outgoing executive of regulatory policy at FSCA, also warned intermediaries that it is illegal to use any licence issued under the Financial Advisory and Intermediary Services Act as cover to offer cryptocurrency.
Business Insider SA