In an era of deepfakes and digital deception, South Africa faces a critical challenge. From fake Elon Musk videos to fraudulent investment schemes, the line between truth and falsehood is blurring. Picture: AI Lab.
“Seeing is believing” is one of the most uncontested idioms in the English language. Court cases are waged based on the power of eyewitness testimony. Meanwhile, sophisticated technologies are being designed specifically to trick our eyes. There is an ever-widening gap between our perception of truth and the images we see. Carolyn Purnell Ph.D. a practising psychologist, writes in an article in 2020, Deepfakes destabilise our collective notions of truth.
1. In today’s digital age, where information inundates our daily lives through various media channels, media literacy education has never been more critical. One must look at the news and information that is brought to us relating to the Russian-Ukraine war.
One report states that the war is over, and the next states that World War 3 has started. Another report states Russia is winning without trouble the next states that it is the end of Putin. As we navigate a landscape fraught with misinformation and divisive narratives, the ability to discern quality information and make informed decisions is essential. The National Association for Media Literacy Education (NAMLE) aims to make media literacy highly valued and widely practiced as an essential life skill. In a mediated world, all people are consumers and creators who deserve guidance on how to cultivate mindful, empowering relationships with media.
2. The Financial Sector Conduct Authority (FSCA) has provisionally withdrawn the licence of Banxso (Pty) Ltd FSP 37699 (Banxso). The provisional withdrawal is based on preliminary investigation findings regarding the activities of Banxso and its association with the Immediate Matrix deepfake advertisements.
The FSCA is amongst others also concerned about the apparently aggressive and pressurised sales techniques used by Banxso agents when selling financial products to clients, promises of unrealistic returns, the failure to conduct the required risk and needs analyses before placing clients in specific financial products, and material losses suffered by clients.
In February 2024, Banxso reacted and stated the following regarding the matter. “Emerging as a malicious phishing scheme, Immediate Matrix, with its roots in ImmediateEdge.com, falsely implicated Banxso, despite there being no legitimate connection. The introduction of ImmediateMatrix.com, particularly targeting the South African demographic, was a calculated move to mislead and deceive.
3. In December 2023, the FSCA said Immediate Matrix was using images of notable businesspeople billionaires such as Elon Musk and Patrice Motsepe in marketing campaigns without their consent to promote an AI trading app promising unrealistic investment returns. Such a practice is known as a deepfake fraud. A deep-fake video using the doctored image and voice of South African billionaire Elon Musk has fooled investors across the world. In one video created for the South African market and regularly flighted on social media channels, “Musk” outrageously and falsely claims that SA billionaires Nicky Oppenheimer and Johann Rupert are investors in his scheme.
In this video placed on YouTube, Elon Musk advises that an R4,700 investment can be made into the algorithm, and within a day you could be rewarded with R30,000. The video is so convincing Musk’s voice even pronounces Johan Rupert's name in a South African (Afrikaner accent)
SABC anchor Leanne Manas well known for her early morning show on television is “angry” and “heartbroken” over the theft of her identity, used to create deepfake video adverts that have seen investors lose their life savings in online trading platforms such as Banxso. Manas has been used for weight loss products as well as the Banxso investment. Swindled investors who have lost money started to harass her at work.
Merely three years ago South Africa made the record books for the largest Ponzi scheme in world history when the infamous Mirror Trading International was exposed. The FSCA warning came much too late for investors who had committed Billions of Rand into a Bot trading algorithm that was also supposed to produce superior returns on a trading platform trading in cryptocurrencies. Investors were initially fooled that Mirror Trading did not require FSCA approval because cryptocurrencies did not fall under their mandate to regulate.
After many years of attempting to recoup lost money in the scheme, the liquidators have recouped a fraction of investors’ money. The mastermind of the Ponzi scheme, Mr Johann Steinberg is reported to have died in Brazil (whilst out on parole). At the time, South African authorities were awaiting him to be extradited. The circumstances surrounding his death remind us of the Thabo Bester case and questions will remain.
4. Realistic versus unrealistic returns.
The question the man in the street has, is what is a realistic return and what is an unrealistic return? The question does not have a short answer, but one can start with “If it sounds too good to be true it probably is.
The return on an investment is the money an investor will receive divided by the investment made. A R10 return on a R100 investment offers a 10% return. The minimum any person should accept on an investment is the return he or she can receive from a risk-free investment.
aRisk-free investments are normally associated with the return one can receive on a Government Bond. One needs to qualify as “normal” in the sense the government needs to be stable. An example of not stable is Zimbabwe, any return promised on the issues of a Zimbabwe Bond is likely not to be trusted as the currency will have depreciated by the time the principal amount invested is repaid.
In South Africa’s case, one can assume that the Government Bond is theoretically the risk-free rate. The risk-free rate should be matched with the appropriate period of the investment.
5. The risk premium refers to the rate of return on an investment above the risk-free or guaranteed rate of return. The risk premium is considered a form of compensation for investors for the uncertainty associated with higher-risk investments. Any investor is always faced with a trade-off between risk and return and fortunately one has a personal choice to make. A young optimistic investor may have a higher appetite for risk than an 80-year-old pensioner, the latter wants to conserve his capital primarily.
The younger investor may wish to take his chances for a higher return with moderate and or more risk. In the extreme, a gambler's approach may disregard risk in its entirety to achieve a hopeful large return. Investors equate low levels of risk or uncertainty with low potential returns.
Conversely, elevated levels of risk or uncertainty are associated with high potential returns. The trouble with the relationship between risk and return is that the expected return is always a potential return and never fully guaranteed. For this reason, discretion and due diligence is required to ascertain the facts. To put a number on all that is said above. Any promise made about a return over 15% must be very well substantiated and backed by facts.
* Kruger is an independent analyst.
** The views expressed herein are not necessarily those of Personal Finance or Independent Newspapers.
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