WATCH LIVE | Banxso Liquidation Case Continues in Western Cape High Court

The liquidation application against trading platform Banxso, brought by investor Carol Margret Wentzel, commenced on Monday in the Western Cape High Court before Judge Le Grange.

Judge Le Grange, who appeared well-versed in the extensive case documentation, immediately delved into critical aspects of the proceedings. Early into the hearing, he raised questions about a website established by liquidators to gather support for the application. Advocate Van Rooyen, representing Wentzel, had mentioned the site collected approximately 2,000 responses potentially representing hundreds of millions of rands in claims.

The Judge expressed concern about the practice of soliciting support for specific liquidators before claims were properly lodged, questioning whether this constituted inappropriate touting. He further inquired why experienced investors would need such assistance if the allegations of fraud were legitimate.

When discussing the rejection of a settlement offer, Judge Le Grange questioned why Wentzel would decline an offer of full security paid into Banxso's lawyers' trust account in favour of liquidation proceedings that might yield significantly less compensation.

Van Rooyen argued that the Consumer Protection Act established that companies paying referral fees constituted a Ponzi scheme, suggesting that if Banxso paid referral fees and bonuses to client accounts, it implied the use of client funds as the only explanation. This assertion appeared to generate some confusion in the courtroom with no one expecting him to raise the trading business potentially being a Ponzi scheme as an argument in the matter.

The proceedings took an interesting turn when one of Banxso's counsels, Advocate Prinsloo, applied to strike certain evidence from the record. Prinsloo argued that the Financial Sector Conduct Authority (FSCA) had improperly complied with a subpoena issued by the applicant's attorneys, Mostert and Bosman, which demanded all documentation and transcripts related to the Banxso investigation. The defence contended that such subpoenas were inappropriate for motion court proceedings.

Judge Le Grange questioned the timing of this application, noting that if the information was already available, removing it now might disadvantage the applicant's case. The FSCA responded that they had complied with a valid subpoena and had not colluded with the applicants or liquidators.

Senior counsel for Banxso, Advocate Muller, then began responding to the liquidation application. Judge Le Grange questioned the role of a Banxso agent, who allegedly pressured Wentzel into depositing additional funds and allegedly offering trading advice on a trade involving Apple shares and their rise in value prior to product launches.

Throughout the proceedings, the Judge showed comprehensive knowledge of how trading platforms operate, recognising that Contract for Difference Trading inherently carries significant risk. He noted the principle that high risk correlates with potential high rewards, and that unsuccessful trades, while disappointing, do not necessarily constitute fraud.

The matter was adjourned at 4pm and is scheduled to resume at 11am on Tuesday. The proceedings are being streamed by IOL with court permission.