South African Ombudsman Acknowledges Increase In Crypto Complaints

An attorney working at the office of Financial Ombudsman, South Africa revealed that the number of complaints involving crypto have increased manifold in the years 2020 and 2021.

 Nonkumbolo Tshombe is a female attorney by profession who is currently working at the office of Financial Ombudsman, South Africa. Speaking on behalf of her office, she acknowledged that in 2020 and 2021, the number of crypto related complaints has surged extensively. While noting the increase, she further suggested that because of no crypto regulation in the country, the office of Ombudsman is helpless. Although, it wants to take up such complaints but couldn’t because digital assets are apparently non-regulated assets within the country.

She noted that under the existing laws, digital assets have not been defined as “financial” products. However, the jurisdiction of the office of Ombudsman is restricted only to the extent of products and instruments of financials. Resultantly, the office is not empowered to deal with inquiries being received by it involving digital currencies and assets.

South Africa is amongst those countries of the world which are thinking about introducing crypto regulations. In fact, the country’s government is already working to establish proper crypto regulations. In the meantime, Financial Sector Conduct Authority (FSCA) had earlier introduced some policies regarding digital assets. FSCA is in fact empowered to take or initiate action against entities of crypto as well as individuals if deemed necessary.

One of the hugest crypto scams that were seen in South Africa was of “Mirror Trading”, which is a globally known crypto fraud. South African investors were amongst the most affected victims of MTI fraud which embezzled billions of dollars worth of cryptocurrencies.

Many of MT’s crypto fraud victims in South Africa lodged complaints against the fraud firm in the office of the Ombudsman. Because of the lack of jurisdiction, however, the office of Ombudsman refused to entertain complaints against MT. The complaints were ultimately entrusted to FSCA which took up the matter and is currently investigating the case. However, it is unlikely that the victims would get their monies back even if it is proved that MT was a fraud scheme. The main perpetrators are absconding and their whereabouts are not known as well. Only if the main culprits are caught, there is some hope of recovering any or all money belonging to MT’s victims.

South Africa has become a number one spot for crypto fraudsters. In the past few years, there had been several crypto frauds that took place in South Africa but MT was the biggest fraud ever. Meanwhile, FSCA has been issuing public warnings informing them that they should approach with caution while dealing with certain crypto platforms. In addition, South African investors have been specifically warned by FSCA to keep their distance from certain crypto products.