Regulator withdraws warning against crypto platform, says it falls outside its jurisdiction

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The FSCA has withdrawn a warning it issued against cryptocurrency arbitrage platform Ovex.
The FSCA has withdrawn a warning it issued against cryptocurrency arbitrage platform Ovex.
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  • The financial services regulator has withdrawn a warning it issued against a cryptocurrency platform, Ovex.
  • It apologised, saying the exchange was outside its jurisdiction. 
  • Ovex's CEO says he got a "massive fright" when he saw the initial statement from the regulator.

South Africa's financial services regulator has quickly withdrawn a warning it issued against cryptocurrency arbitrage platform Ovex, saying the exchange falls outside its "current jurisdiction".

The Financial Sector Conduct Authority (FSCA) apologised for "any inconvenience caused".

On Thursday, the FSCA warned the public that the Cape Town-based platform was "not authorised to give any financial advice".

The FSCA retracted its initial warning later on Thursday, saying it was in correspondence with Ovex and was withdrawing its previous warning amid a probe.

By Friday morning, the FSCA said the probe was complete and had shown that Ovex "does not currently require a licence from the regulator" as its business activity "falls outside the current jurisdiction of the FSCA".

"The investigation is closed and we apologise for any inconvenience caused as a result of the warning."

Ovex CEO, Jonathan Ovadia, said the FSCA had contacted him on 5 March, apparently in relation to a complaint. He said he had been given until 12 March to respond. 

But the following day, while Ovex was still in discussions with the regulator, Ovadia said he was shocked to see a FSCA statement saying that the firm did not have a license to provide financial advice. 

Timing was especially bad, as that the company was busy with a fundraising drive.   

"I obviously got a massive fright, I phoned them and asked what the hell is going on. The investigator who was dealing with our case had no idea," said Ovadia. 

Ovadia said a top FSCA official later told him they had "made a mistake" and the notice was "not supposed to go out". 

The CEO said that, on Thursday, some clients had wanted to stop trading because of the initial warning. 

While the FSCA apologised on Friday morning, Ovadia said the initial warning never should have gone out. 

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