FTX and ByBit, two digital currency derivatives trading platforms, have been serving South Africans illegally, a local regulator has warned. The Financial Sector Conduct Authority (FSCA) released separate warnings against the two platforms, which it said were not authorized to offer any financial services in the country.
Headquartered in the Bahamas after fleeing Hong Kong, FTX has become a big player in the digital currency derivatives industry, first gaining popularity with its myriads of partnerships with sports brands, including forking out $135 million for the naming rights to the Miami Heat Arena. However, in its bid to expand globally, it has made a mistake many other exchanges, led by Binance, have made—ignoring licensing and other regulatory requirements.
In its announcement, the FSCA stated, “It has come to the attention of the FSCA that FTX might be offering the South African public, access to its online platform to trade in amongst others, derivatives instruments. FTX is not authorised to give any financial advice or render any intermediary services.”
— FSCA South Africa (@fscasouthafrica) February 1, 2022
Any company that wants to offer Contracts for Difference (CFD) trading in South Africa must be licensed by the FSCA, and FTX isn’t.
The watchdog has made attempts to reach out to FTX to resolve the issue to no avail, it said in its announcement. However, Sam Bankman-Fried, the CEO and founder of the exchange, denied the claim.
“We are not aware of any outreach from the FSCA but would be excited to engage with the FSCA to comply with SA requirements,” he said on Twitter, adding that FTX had reached out to the watchdog to initiate a dialogue.
“We would be excited to work with the FSCA, and appreciate them for bringing this to our attention.”
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.
— SBF (@SBF_FTX) February 2, 2022
The FSCA also shot a warning against ByBit, yet another derivatives exchange based in Seychelles. Unlike FTX, ByBit has been called out before for operating without a license, with the exchange receiving multiple warnings in different jurisdictions.
In Canada, the Ontario Securities Commission (OSC) said in June last year that the exchange had been operating without a license and ordered it to cease serving residents. Just weeks prior, Japan’s Financial Services Agency issued a similar warning. Earlier in March, ByBit had been forced to shut down its U.K. operations after regulatory warning, and in August, Spain joined its counterparts and warned about ByBit.
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