South African Regulator FSCA Cautions Consumers Against FTX, Bybit

The Financial Sector Conduct Authority (FSCA) of South Africa issued two notices yesterday, warning the public against dealing with crypto exchanges FTX and Bybit. 

In a press release, the FSCA told the public to be “cautious and vigilant” when trading with Bahamas-based FTX, adding that “FTX is not authorised to give any financial advice or render any intermediary services in terms of the Financial Advisory and Intermediary Services Act, 2002 (FAIS Act) in South Africa.”

The press release also highlighted the fact that FTX is not authorized to trace in Contracts for Difference, financial instruments that enable investors to speculate on the short-term price movements of an asset. 

The FSCA also issued the same missive with FTX’s name substituted out for Bybit, a Seychelles-based exchange that has been operational since 2018. Bybit’s missive reported that Bybit has responded to the regulator and is willing to apply for the necessary authorization. 

A spokesperson from Bybit told Decrypt via email, "Bybit has been in correspondence with the FSCA and will continue to engage in productive dialogues with the intent to resolve the issue to the satisfaction of all those involved. We regularly evaluate the viability of providing the quality services clients have come to expect of us, while constantly improving our compliance standards to keep up with changes in local regulatory regimes."

The FSCA said that its attempts to contact FTX were unsuccessful; FTX CEO Sam Bankman-Fried announced on Twitter that FTX was "not aware of any outreach from the FSCA but would be excited to engage with the FSCA to comply with SA requirements," adding that the company had "reached out today to initiate a dialog."

South Africa clamps down on crypto

South African regulators have been perturbed by major instances of crypto fraud in the last year. 

In April, two brothers who founded South African crypto trading platform Africrypt, Raees and Ameer Cajee, shuttered operations and disappeared without a trace, taking 69,000 BTC (then worth around $3.6 billion) with them. 

In January this year, the defrauded Africrypt investors decided to take collective action. They’re currently pushing for the missing Cajee brothers to be tried for fraud, theft, and money laundering.

Back in December, FSCA commissioner Unathi Kamlana told Bloomberg that the regulator was developing a framework to establish how crypto trading in South Africa should be conducted.

Editor's Note: This story was updated at 9 am EST on February 4, 2022, to add a comment from Bybit about the FSCA.