FSCA warns of alleged crypto scam in South Africa

The Financial Sector Conduct Authority (FSCA) warned the public about a group called “Coin Max”, which has allegedly been offering investors unrealistic returns through investments in crypto assets.

On 23 April 2024, the FSCA issued a warning about individuals operating under the name “Coin Max” who appear to be associated with Bybit FTZE.

“It has come to the attention of the FSCA that there are individuals who are offering members of the public unrealistic returns through investment into crypto assets,” the organisation said. 

“The individuals are purporting to be associated with Bybit FTZE and instruct unsuspecting members of the public to make payments into bank accounts held by multiple third parties.” 

The FSCA said it suspects that the individuals are using mule accounts as part of their operation. Europol defines money muling as a type of money laundering. 

“A money mule is a person who receives money from a third party in their bank account and transfers it to another one or takes it out in cash and gives it to someone else, obtaining a commission for it,” according to Europol.

The FSCA said offering financial products and services – including services related to crypto assets – requires authorisation by the authority. 

“Coin Max is not authorised under any financial sector law to provide financial products or financial services in South Africa,” it said.

Bybit FTZE is a representative of an authorised FSP, and it has applied for authorisation as a crypto asset services provider (CASP). 

Having applied for its CASP licence by 30 November 2023, Bybit FTZE is authorised to provide financial services in respect of crypto assets whilst the FSCA considers its application. 

The FSCA said Bybit FTZE has confirmed that it does not have any association with Coin Max and any of the individuals purporting to be associated with it.

The authority warned that members of the public should always check –

• That an entity or individual is authorised by the FSCA to provide financial products and services, including for giving recommendations about how to invest
• 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
• That the FSP number utilised by the entity or individual offering financial services matches the name of the FSP on the FSCA database

The FSCA said Coin Max was not available for comment.