South Africa’s FSCA warns investors against using FTX and ByBit

South Africa’s top financial regulator, the Financial Sector Conduct Authority (FSCA), has cautioned citizens against using cryptocurrency exchanges FTX and ByBit. FSCA issued two notices on February 1 warning the public against using the platform.

The first circular focused on Bahamas-based FTX, with the regulator highlighting that it offers South Africans access to derivatives trading, among other services. FSCA added that FTX does not have permission to give any financial advice or provide any intermediary services under the Financial Advisory and Intermediary Services Act, 2002 (FAIS Act) in South Africa.

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The watchdog further noted that any company that offers contracts for difference (CFD) must register with it, a requirement that FTX has not yet met. FSCA claimed it attempted to contact FTX regarding this matter, but these efforts were unsuccessful.

As a result, the regulator resolved to warn the public that they should always check and ensure that an entity or individual is registered with it. Additionally, the watchdog noted it is vital to check the category of financial advice a company is registered to provide.

According to FSCA, there have been instances of entities registering to offer basic advisory services for low-risk products before proceeding to offer services that are complex and risky.

FTX refutes FSCA claims

In FTX’s defense, the exchange’s CEO, Sam Bankman-Fried, took to Twitter earlier today to say,

We would be excited to work with the FSCA, and appreciate them for bringing this to our attention. We are not aware of any outreach from the FSCA but would be excited to engage with the FSCA to comply with SA requirements. We have reached out today to initiate a dialog.

The notice warning investors against using Seychelles-based ByBit was similar to the one about FTX. However, FSCA pointed out that attempts to communicate with the exchange were successful, and ByBit expressed its willingness to apply for authorization to offer financial advisory services and intermediary services in South Africa.

While the exchange said it is willing to make these changes, FSCA warned the public to exercise caution while dealing with it until it completes the authorization process.

The FSCA’s efforts to protect consumers come after two brothers founded a crypto trading platform dubbed Africrypt before shutting down operations suddenly and disappearing with 69,000 Bitcoin (BTC/USD) worth around $3.60 billion (£2.65 billion) at the time.