Regulator issues, then withdraws, warning on Ovex crypto exchange

May 6, 2021 Siyabonga Mtangana

The Financial Sector Conduct Authority (FSCA) issued and withdrew a warning on South African cryptocurrency arbitrage company Ovex – all in the space of hours on Thursday.

The original warning issued early on Thursday claimed Ovex was conducting unregistered business and providing advisory and intermediary services without the necessary authorisation.

Ovex offers a crypto arbitrage service where clients are able to exploit price differences in crypto assets between local and overseas exchanges.

By lunchtime, the FSCA had withdrawn the warning, saying that Ovex is in correspondence with the regulator “because it believes that its business model does not require it to obtain a financial services provider licence, as it does not conduct financial services”.

“The FSCA is currently investigating these matters and therefore withdraws the previous media release until such time as the investigation is completed. The FSCA will in due course update the public on the outcome of the investigation.”

‘Not 100% sure’

FSCA head of enforcement Brandon Topham said: “We are not saying they’re operating unlawfully, but we are urging caution when dealing with Ovex as they are making claims of returns. Whether they need to be registered (as a financial services provider) or not, we are not 100% sure as yet. We have asked for more information, and we may amend or retract the warning as we have more information.”

That was in the morning, and the FSCA did indeed amend its statement by lunchtime.

Topham confirmed that the FSCA might have jumped the gun in issuing a public warning without giving Ovex time to respond to its request for documents.

Ovex said the warning was damaging to its business and issued without giving the company time to respond to questions sent earlier in the week.

“We’ve been in contact with the FSCA, who have asked about our advertising activity. They sent a list of questions. Our contact at the FSCA did not even know about the FSCA warning.

“It seems there may have been panic, and the announcement was made without proper process. Ovex always acts in a 100% compliant, legal and ethical manner, seeking legal and compliance advice with every action.

“We have halted our advertising campaign until this issue is resolved, which we expect to be this week. Once resolved, we expect the FSCA to issue a full retraction, as this is extremely damaging to one of South Africa’s fastest-growing companies.”