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South Africa’s financial services industry watchdog has issued a warning against unlicensed crypto trading firms accused of soliciting public funds while promising unrealistic returns of up to $542 per day.
Unlicensed Crypto Firms Use Celebrity Names to Promote Offerings
South Africa’s financial services industry watchdog, the Financial Sector Conduct Authority (FSCA), has issued a public warning regarding two unlicensed crypto firms, Afriinvest and Mutualwealth. The FSCA alleges that the two entities are soliciting funds from the public for investment purposes while promising unrealistic returns.
The warning stems from reports that Afriinvest and Mutualwealth are guaranteeing returns as high as $542 (R10,000) per day. The firms, which claim to use artificial intelligence (AI) to achieve these returns, are also accused of using the names of prominent South African figures, including musician Steve Hofmeyr and Afriforum CEO Kallie Kriel, to promote their services.
In an FSCA statement issued on March 28, Hofmeyr, Kriel, and Maroela Media are said to have denied having any ties to Afriinvest or Mutualwealth.
“While the FSCA does not comment on the specifics of Afriinvest or Mutualwealth’s business, it must be noted that these entities are not authorized under any financial sector law to provide financial services to the public in South Africa,” the FSCA said.
The FSCA said it strongly advises investors against accepting financial advice, assistance, or investment offers from unauthorized individuals or entities. It also reminds the public that authorized financial service providers are required to clearly display their authorization status in their documentation.
Furthermore, the FSCA urges the public to be vigilant when considering investment or trading offers on social media or any unsolicited offers. According to the statement, investors can verify whether the entity or individual offering financial products and services is authorized by the FSCA. They should also check the category of advice the provider is registered to give and ensure that the financial service provider (FSP) number matches the name of the provider in the FSCA database.
The FSCA has provided methods for the public to confirm the status and FSP number of service providers.