[UPDATE] FSCA issues and withdraws warning on Ovex crypto exchange

All in the space of hours.
Image: Supplied

The FSCA issued a retraction of the warning on Friday morning, noting that its investigation into Ovex has been closed. Read the full retraction here.

The Financial Sector Conduct Authority (FSCA) issued and withdrew a warning on crypto 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By lunchtime the FSCA had withdrawn the warning, saying that Ovex is in correspondence with the regulator “because it believes that its business model does not require it to obtain a financial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.”

Moneyweb contacted the FSCA’s head of enforcement, Brandon Topham, for clarification on the warning, and its subsequent withdrawal. “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.

Ovadia says 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 [as if] 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.”

Read the FSCA caution here.

Read the FSCA notice here.



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Isn’t this the crypto so eagerly punted by Moneyweb and Mr.Ryan over the last few months? Always an advertisement, just below the main articles on the web page.

One and the same. Promising 4% per week returns, which, compounded, translates to 780% and more per year. And, note: allegedly risk-free. Not even Marietjie Prinsloo, who offered a mere 10% per month, could even come close.

The returns are indicative of current market dynamics. Misleading clients is not the OVEX way. OVEX will continue to work with organisations like the FSCA to address the rising number of cryptocurrency scams in South Africa.

@Ovex.io – this is not the impression that was created by your ads and the articles on Moneyweb. Your ads promised 4% per week. An unsophisticated pensioner could very easily look at your ad and see a guaranteed return of 780% per annum, risk free. Not true, is it?

I am a bit disappointed that nobody has pointed out that risk-free investing is a myth, especially anything associated with crypto. There is always risk attached to an investment even if the risks can be considered minimal (https://www.investopedia.com/terms/r/risk.asp). Not informing investors of this is false advertising and misleading.

I believe Ovex should be licensed and regulated as they provide a service akin to forex trading. If cryptos want to be treated like currencies, they should conform to the same rules.

Also why would Ovex share the secret of the goose that lays the golden eggs? Surely the more people do this the quicker the margins would vanish. Unless they are making transaction or platform fees and cashing in on volumes, therefore not caring whether the goose is alive or not as long as the users still think it is.

Jonathan calls Daddy, Mr Eli calls Mr Eff sort this out, He calls MR VBS he calls Mr FSCA and boom Ciaran keeps his retainer.

An institution that offers a return on an investment that will be delivered at a future date and markets this service to a specific group of potential clients has to be registered as an FSP.

If they say that they are dealing in a commodity then then they cannot offer a return on investment.

The FSCA regulates FSPs to ensure that they will have the operational ability and the funds to honour their promises at a future date. Why would any service provider want to sidestep such prudent measures aimed at protecting investors?

I don’t think the relevant issue is Ovex and its Arbitrage service. If you understand arbitrage, you will understand the prospective returns. It is based on price differentials and not the increase of underlying assets.

I think the main issue is the FSCA! How on earth can the FSCA issue a statement condemning Ovex and then retract it a few hours later?
It smacks of incompetence.

So basically they offer a 4% per whatever return on widgets, be it crypto or potatoes. Start with 100 potatoes, Friday you have 104 potatoes. Whether the 104 potatoes are worth more or less than what you paid for the first 100 is up to the gods.

Would be very nice if there was that kind of arbitrage on shares. Buy 100 Amazon and Friday you have 104 Amazon shares. Wonder why that does not work for Amazon shares…

I don’t think you understand arbitrage.
You buy 1 Bitcoin in the US for $50k and sell the very same Bitcoin in Rands in South Africa for more than $50k. The difference can be up to 5%, and the only real risk is the forex risk.

Interestingly, many years ago many people made millions from arbitrage on share transactions. In some cases, the margin was 10%+. Arbitrage is nothing new.

James, runts round trip all the way back to runts, having twice passed through the banks’ buy/sell margins : what is the net result?

Arbitrage tends to exist due to externalities. So Anglo price in London is GBP 100 (with Runt at 20) but Anglo price on JSE is R202. Modern trading systems have wiped out most of the arbitrage opportunities.

It is anyway not clear to me how an ounce of Gold or a Bitcoin would have different prices in different places other than by vagaries of the brokers.

Be careful there FSCA. You are suppose to be a financial conduct watchdog but not the chihuahua breed.

We expect clarity and firmness from you. Only the local municipalities are allowed to change their minds twice in a day.

Not sure if the profit you can make on an arbitrage transaction qualifies as interest. The profit you make in this way is the result of a temporary price imbalance.

According to OVEX’s website the BTC/ZAR vs BTC/USD price difference is 4.6%. So this probably the upper estimate of what you *may/could/might* make.

However, they do offer an interest account with an annual interest rate of 4%,7%,9% or 10% pa, depending on the crypto currency you buy…..

OVEX also does not respond to emails even after following up numerous times. Tells you all you need to know.

well ja no fine. arbitrage is real, and provided transactional costs are not too high some real profits can be made. the more your book grows however, the surer those arbitrage opportunities evaporate….. and then, when the big bear hits, it goes to poopoo. so ja, if you expect the market to gallop along, by all means.

So maybe the FSCA should zip it if they are not sure about something???

Are these the guys that is going to “regulate” crypto in SA?? If so, it might be best to start looking for an offshore destination??

I am not sure whether Ovex has promised any returns, but anyone who understands arbitrage in financial investment terms will know what is meant by a notion that you can get a 4% growth on your investment in such a short space of time.

The problem is, many people see it perhaps as passive investment, where this type of investment will still require the investor to be actively involved with his/her investment to ensure that they do get that kind of growth.

I have my own FSP and have dealt with OVEX.

The FSCA is at fault here! No Crypto Exchange is currently registered as FSP’s at the FSCA as they have not yet put everything in place on their side for these exchanges to register due to the complexity and difference between products supplied by actual product providers, Stocks on the JSE and Crypto Currency’s.

Arbitrage is real and is especially strong in the Crypto Market. Once more people start adopting Crypto Currency’s the less effective arbitrage will become.

I suggest doing one’s home work on Arbitrage in general if the concept is a bit strange for you.

Ovex does not promise an exact return on investment. They are stating the average return per cycle on an assets not regulated by the FSCA as yet and therefor does not need to be an FSP.

However Ovex, Luno and others has on multiple occasions stated that they would register as soon as the FSCA get their ducks in row.

There will always be risk to any investment, however Ovex has been and is doing a good job.

I offered the crypto traders a fantastic deal but none wants to take me up on it.

Here it is: considering that you view your advertised returns at least in the hundreds of percentages, I will give you R10,000 tomorrow and the next day you give me R20,000 which is a lousy 100% profit to myself. Now you have R10,000 debt free to “invest” for a year which according to your PR should at least return 200% – a wonderful profit of R10,000 for doing nothing! We could extend the offer to R1m with your bank guarantee of payment.

Strangely, none has accepted my offer.

End of comments.


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