FSCA warns against CashFX

One cannot help but wonder if people will pay attention to the warning issued by the Financial Sector Conduct Authority (FSCA) against doing business with or investing money in Cash FX Group (CashFX).

The recent warning raises a few questions: Do promoters of and investors in such schemes even know about these warnings? If they do, do they care? Do they even think that CashFX might be a pyramid scheme?


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The FSCA warning merely states that Cash FX is not licensed to give financial advice or render any intermediary services in terms of the Financial Advisory and Intermediary Services Act. The FSCA says the CashFX website “creates the impression that it provides a foreign exchange trading platform” and seems to trade on behalf of clients via “copy trading”.

“Additionally, it appears on social media that CashFX promised that clients will yield a financial return between 5 [and] 20% weekly. CashFX supposedly does presentations in South Africa to members of the public and offers different training packages,” reads the FSCA warning.

However, the FSCA stops short of saying that CashFX might be a scam.

Warning signs

The signs are all there. CashFX makes a lot of claims and promises, while the basic structure of the “investments” and large benefits of introducing other people to join are similar to those of a pyramid scheme.

For some reason, these scams regularly ask for some form of payment or membership fee of around 25%. They always offer different packages or investment levels (often referred to as a matrix).

In the case of CashFX, packages range from $300 to $100 000, of which 30% is paid towards CashFX and the balance is invested in a forex trading account.

The 30% – $90 of the smallest $300 plan – supposedly pays for training material.

A second characteristic of investment scams is the so-called forced matrix, which forces investors to buy more expensive plans after they have made some money.

CashFX requires investors to upgrade to a higher plan once they have earned a return of 100%.

Supporter shares his insights

If investors upgrade fast enough, they only pay the difference between what they earned and the price of the new plan, explains one of the promoters of the scheme in an article published in the Lenasia Rising Sun a few months ago.

“Our product is the Trading Academy Pack (TAP) which is where those interested in forex trading can learn through our group of trading experts from the very basics of trading to the advanced trading lessons,” says Bongani Fakude in the article.

“Our trade contract packs range from as little as $300 to $100 000. This ensures that the company caters for all. When you invest 30% of your money that you pay in goes towards the TAP and 70% is automatically placed on the Trading Pool. Invest $1000, $300 goes to TAP, but instead of going to the company half of that $300 goes to your sponsor as a fast start bonus.

“The other $150 goes towards the unilevel commissions. So, 30% is absorbed on the compensation plan. Should you wish to withdraw from the program the company can refund 70% less a penalty fee, but take note the 30% that has gone towards the compensation plan cannot be refunded as it was already paid out!” says Fakude.

It’s clear that it is highly profitable to recruit new members, with Fakude noting that recruiters can earn twice as much as investors.

The second warning sign is that CashFX promises unusual high and consistent returns of 5% per week.

Moneyweb got hold of Fakude, who says that he has been involved for the last 24 months, and sent screen shots of a couple of his payments as proof that CashFX is still going and paying out trading profits.

“This is not a scam. I trust this company hence I went all out and putting an ad on the paper, I have invited my family members and most of my close friends and colleagues at work,” he says.

“Very soon they will be having a ribbon cutting ceremony at their offices in Panama, they also ran a competition where members could win tickets to the ribbon cutting ceremony.

“That would be a big scam,” he adds, indicating that it must therefore be legitimate.

“Most companies in the same space as CashFX have collapsed with the volatility of Bitcoin, yet it’s still standing and bigger investments are being made for better upgrades. I see a well structured futuristic company,” says Fakude.

Social media

On the question of the FSCA warning, he says the broker that CashFX has partnered with is regulated all over the world with the best certificates in the world.

This is a claim that CashFX promoters often repeat.

“The CashFX company broker and main partner is regulated by the following institutions: Financial Conduct Authority (FAC) of London, in Dubai with the Financial Services Authority (DFSA), Financial Sector Conduct Authority of South Africa (FSCA) and the Financial Services Authority of Seychelles (FSA),” according to another promoter pushing CashFX on Youtube.

Nobody can tell if the warnings from the FSCA have the same reach.

Read: When high returns raise suspicions

A problem with scams is that promoters are doing such a good job of selling them on social media platforms that they become so recognisable they start to look like mainstream investments.

Do people realise the difference between a video clip promoting CashFX and those from traditional and registered investment managers who publish their presentations on Youtube?

Easy money

While CashFX and its promoters proclaim that selling training modules is a main part of their business, common sense disagrees. Most investors want easy money and would not even look at the training material for more than five minutes.

The CashFX website says that trade on global foreign exchange markets exceeds $5 trillion a day, and it attracts millions of people with a shared dream of financial freedom. CashFX says investors can earn passive income by joining the programme to copy the trades executed by its experienced experts.

The advantage of copy trading, it says, is that “the individual account holder is not required to do any trading activity” themselves.

“One may participate in copy trading with absolutely no trading experience,” according to CashFX.

The too-good-to-be-true performance is apparently based on “expert advisor algorithms, artificial intelligence technology and professional forex trading teams working together”.

CashFX has either written the world’s winning algorithm (unlikely) or it is a pyramid scheme that will fail when it runs out of new recruits, which might take years given that CashFX is apparently targeting almost every country on earth.

While the FSCA cautions that the public should always check that an entity or individual is registered with the FSCA to provide financial advisory and intermediary services, it is difficult to stop the marketing of dubious schemes by foreign companies to SA citizens.

CashFX is registered in Panama and the local promoters are enlisting new members.

It might carry on for a long time – the world population is approaching 7.9 billion and new suckers are born every second.

Source: moneyweb.co.za