Karatbars International GmbH, the company behind the controversial KBC Coin, and its products don’t fit the definition of a product or service under South Africa's financial laws, its financial markets regulator announced. The South African public is urged to be aware of the risks that come with investing in such a product. The Financial Sector Conduct Authority (FSCA) issued a warning in November against Karatbars, saying that it wasn’t authorized to operate in the country. Part of the warning stated: “The FSCA was informed that Karatbars International GmbH has been offering investments to customers via WhatsApp. Karatbars International GmbH is based in Germany and is not authorised to render financial advice and intermediary services in South Africa.” The German regulators had taken a harsher stand, issuing a cease and desist against the company. BaFin identified the Belize-registered company as a pyramid scheme. As CoinGeek reported, the firm was also expected to settle any outstanding claims before ceasing operations in the European country. Additionally, the firm was to face prosecutors in Stuttgart in connection with the allegations. For its part, the FSCA stated: “The company is selling these products to South African citizens who are using their discretionary foreign or investment allowances to make these purchases. Neither of these products fall within the definition of a financial product or service. As such, they are not registered by the FSCA and fall outside the ambit of our jurisdiction.” The regulator urged the public to be cautious in investing in high-risk products, especially if they're "unable to ascertain the ability of the companies involved in these kinds of transactions to honour their commitments or financial obligations to clients." The FSCA made it clear that should any investor lose their money in the project, it would be unable to assist. While this clarity is welcome, it gives Karatbars the explicit right to offer its products without any oversight from the FSCA. This could prove detrimental to investors, especially if the company turns out to be a scam as alleged by the German regulators.