South African Reserve Bank Targets Kastelo in R4 Billion Crypto Arbitrage Probe
The South African Reserve Bank is investigating fintech company Kastelo Proprietary Limited over suspected exchange-control breaches involving at least R4 billion in transactions linked to crypto arbitrage and offshore foreign-exchange flows.
The allegations became public through a legal battle between Kastelo and the central bank over a blocking order placed on one of the company’s bank accounts.
On July 28, 2026, the Gauteng Division of the High Court in Johannesburg dismissed Kastelo’s attempt to overturn that order. The full case, Kastelo Proprietary Limited v South African Reserve Bank and Others, is available through the Southern African Legal Information Institute.
The ruling is significant, but it needs to be understood carefully.
The court did not find Kastelo guilty of illegally moving R4 billion out of South Africa.
Instead, it found that the Reserve Bank had sufficient grounds to reasonably suspect that exchange-control regulations may have been breached and could therefore maintain its blocking order while the investigation continues.
Kastelo disputes the central bank’s interpretation of its business model and says its clients knowingly participated in crypto-arbitrage transactions using their own foreign-investment allowances.
The case has nevertheless opened a much wider debate about how crypto arbitrage interacts with South Africa’s strict rules governing money moving across its borders.
What Is Kastelo?
Kastelo is a South African fintech business that has offered a range of financial services, including crypto arbitrage.
Crypto arbitrage attempts to profit from price differences for the same cryptocurrency across different markets.
For example, Bitcoin might temporarily trade at a higher rand-equivalent price on a South African exchange than on an overseas exchange.
A simplified arbitrage trade could therefore look like this:
- Convert rand into foreign currency.
- Send the foreign currency offshore.
- Buy cryptocurrency on an overseas exchange.
- Transfer the cryptocurrency to South Africa.
- Sell it locally at a higher rand price.
- Keep the difference after fees and other costs.
That price difference has historically created an opportunity for South African crypto-arbitrage businesses.
Kastelo told Business Day that its service allowed clients who might otherwise struggle to access offshore opportunities to participate in this type of trade. The company said clients invested their own money while Kastelo administered the process under discretionary mandates and charged a fee.
The Reserve Bank’s concern is not simply that crypto arbitrage occurred.
The dispute centres on whose money and foreign-exchange allowances were being used, who effectively controlled the transactions, and whether the structure complied with South Africa’s exchange-control rules.
Where the R4 Billion Figure Comes From
The R4 billion in the headline is not the amount of money seized from Kastelo.
It is the approximate value of transactions that the Reserve Bank says gave rise to a reasonable suspicion of exchange-control contraventions.
According to reporting based on the Reserve Bank affidavit and High Court judgment, SARB investigator André Malherbe examined cross-border foreign-exchange data involving Kastelo as well as information from witnesses and whistleblowers. That analysis produced what the central bank described as reasonable suspicion involving at least R4 billion.
The Reserve Bank is not claiming it seized R4 billion from Kastelo.
The actual blocking order related to money held in an Access Bank account. Contemporary reporting places the balance affected by the order at roughly R13 million. (Daily Investor)
The R4 billion relates to the much broader set of transactions under investigation.
How South Africa’s Foreign Investment Allowances Work
South African residents cannot simply move unlimited amounts of money offshore.
Exchange-control rules provide individuals with specific allowances that can be used for legitimate overseas purposes.
The South African Reserve Bank’s Financial Surveillance guidance describes a Single Discretionary Allowance, or SDA, and a separate foreign capital allowance.
During the period central to the Kastelo case, an adult South African resident generally had an SDA of up to R1 million per calendar year. Tax-compliant individuals could also invest up to R10 million offshore per year, subject to the applicable tax-compliance process.
These allowances belong to the individual.
That point is crucial to understanding the Kastelo dispute.
The Reserve Bank’s published guidance specifically says that one individual may not make another person’s allowance available through a loan or similar arrangement designed to circumvent exchange-control rules. SARB describes such an arrangement as a simulated transaction prohibited by the Exchange Control Regulations.
At the same time, South Africans can legitimately use their own allowances to purchase crypto assets abroad, subject to the applicable requirements.
So crypto arbitrage itself is not automatically the problem.
The key question is how the foreign currency used in the arbitrage was obtained and controlled.
What SARB Alleges Kastelo Was Doing
According to the Reserve Bank affidavit described in the High Court proceedings, SARB suspects Kastelo’s business model went beyond merely administering investments for customers.
The central bank alleges that Kastelo used clients’ individual foreign-exchange allowances in a manner that effectively allowed Kastelo itself to externalise capital through third parties.
The allegations include claims that Kastelo:
- used customers’ Single Discretionary and Foreign Investment Allowances as part of the arbitrage structure;
- exercised control over foreign-currency flows;
- allegedly carried out some transactions without meaningful client participation;
- allegedly used financing arrangements enabling clients to use their allowances;
- allegedly failed to accurately describe aspects of its activities in regulatory declarations; and
- may have acted as a principal in transactions where regulatory rules required it to act as an intermediary.
These are SARB’s allegations, not established findings of misconduct.
Kastelo disputes several of them.
The Loans Are One of the Most Important Parts of the Case
One allegation is particularly important because it goes directly to the purpose of individual foreign-exchange allowances.
The Reserve Bank says Kastelo sometimes provided clients with financing that enabled them to make use of their individual allowances.
The High Court material cited by BusinessTech records SARB’s concern that these arrangements could amount to simulated transactions designed to circumvent exchange controls.
Access Bank’s review reportedly identified examples in which customers with relatively modest monthly earnings had received significantly larger loans linked to the investment process.
Why does this matter?
Imagine an investor has a personal foreign-investment allowance.
If a company simply gives the investor money so that the company can effectively gain access to that person’s unused allowance, regulators may ask whether the investor is genuinely making an independent offshore investment or whether their allowance is effectively being rented by someone else.
SARB’s existing crypto and exchange-control guidance is explicit that an individual cannot use another person’s SDA or foreign capital allowance through a loan or similar agreement designed to bypass the regulations.
Whether Kastelo’s arrangements legally crossed that line remains part of the dispute.
SARB Also Questions Who Really Controlled the Trades
Another major issue is control.
Kastelo describes itself as administering investments on behalf of clients.
The Reserve Bank suspects that, in practice, Kastelo may have exercised such extensive control over the foreign-currency transactions that the trades were effectively being carried out for Kastelo’s benefit rather than as genuinely independent investments belonging to individual customers.
That distinction matters because an individual’s ability to invest offshore does not automatically allow a company to aggregate or control thousands of personal allowances as though they were the company’s own foreign-exchange allocation.
SARB alleges the dominant purpose of the structure was to use third-party allowances to obtain foreign currency without the necessary permission.
Again, that remains an allegation being investigated.
Were Clients Aware of What Was Happening?
The Reserve Bank has also questioned how much some customers understood about the process.
According to its affidavit, SARB suspected that some clients were incentivised to participate through bonuses and may not have understood all the offshore banking arrangements being established in their names.
Kastelo strongly disputes that characterization.
The company told Business Day that customers were given explanatory material and relevant agreements before participating. It said a video shown to clients specifically explained that accounts would be opened as part of the investment process. (Business Day)
Kastelo’s position is that customers used their own allowances for their own investments, while the company handled the complicated administrative and trading process for them in exchange for a service fee.
That is fundamentally different from the picture painted by SARB.
The investigation will have to determine which interpretation is supported by the evidence.
Why Access Bank Matters
Interestingly, the investigation was not initially triggered by SARB independently stumbling across Kastelo’s business.
According to the High Court judgment as summarized by BusinessTech, Access Bank, Kastelo’s authorised dealer, raised concerns about transactions and conducted its own forensic review. The bank then reported the matter to SARB’s Financial Surveillance Department.
That became an important factor when the court considered whether SARB had reasonable grounds to act.
The regulator was not relying on one isolated allegation.
It had transaction information, concerns raised by the authorised dealer, whistleblower material and other evidence that it considered sufficient to justify further investigation.
SARB Froze the Account in November 2025
On November 24, 2025, the Reserve Bank’s Financial Surveillance Department issued a blocking order affecting Kastelo’s Access Bank account.
A blocking order is essentially a preservation measure.
It stops specified funds from being withdrawn or moved while regulators investigate whether exchange-control violations have occurred.
It is not the same as permanently confiscating the money.
Kastelo challenged that decision in court.
An initial urgent application was dealt with in January 2026, before the substantive challenge eventually resulted in the July judgment.
What the High Court Actually Decided
The July 28 judgment is easy to misinterpret.
The High Court did not conduct a trial and conclude that Kastelo had illegally exported R4 billion.
Instead, it considered whether SARB had adequate grounds to issue and maintain the blocking order.
The legal threshold was therefore much lower than proving an exchange-control violation.
The court found that the information available to the Reserve Bank, viewed as a whole, provided reasonable grounds for suspicion. It consequently dismissed Kastelo’s challenge and left the blocking order in place.
BusinessTech’s account of the judgment notes that the court described the reasonable-suspicion threshold as relatively low and objective, requiring the available information to be considered collectively.
Kastelo Says Its Business Model Was Legitimate
Kastelo argues that its customers were using their own lawful allowances to participate in crypto arbitrage.
The company told Business Day that it helped make offshore investment opportunities available to ordinary clients who might otherwise lack the expertise or administrative capacity to conduct such trades themselves.
It also rejected suggestions that clients were unaware of how the process worked.
Kastelo says customers received documentation explaining the arrangements and that its role was to administer arbitrage transactions on their behalf under discretionary mandates.
The company also argues that money was ultimately brought back into South Africa after each arbitrage cycle.
From Kastelo’s perspective, the transactions therefore did not represent a permanent flight of capital from the country.
SARB Says Bringing the Value Back Does Not Necessarily Solve the Problem
The Reserve Bank takes a different view.
Its concern is that exchange controls are partly designed to protect South Africa’s foreign-currency reserves.
According to SARB’s argument presented in the proceedings, converting rand into foreign currency and sending that foreign currency abroad can still affect the country’s reserves even if cryptocurrency or rand value later returns to South Africa.
The regulator therefore rejects the idea that simply repatriating the economic value automatically makes the original outflow compliant.
SARB’s existing rules also draw a distinction between purchasing crypto assets abroad and bringing value back through crypto.
Its Financial Surveillance FAQ says that under the current framework, repatriating value to South Africa through crypto assets is not permitted as part of an individual’s SDA or foreign capital allowance because the transaction cannot currently be reported through the existing FinSurv reporting system in the same way as conventional flows.
That regulatory gap is now beginning to change.
South Africa Is Rewriting Its Cross-Border Crypto Rules
The Kastelo dispute arrives at an especially interesting moment.
South Africa is currently developing a much clearer framework for cross-border crypto transactions.
On August 3, 2026, National Treasury and SARB published a draft Crypto Assets Manual for cross-border activities, building on draft Capital Flow Management Regulations released earlier in the year.
The proposed framework would establish clearer rules for Authorised Crypto Asset Service Providers and specify when a crypto transfer becomes a reportable cross-border transaction.
Under the proposal, a transfer between a domestic authorised crypto provider and an offshore provider — or certain transfers from a domestic provider to a non-custodial wallet — could trigger cross-border reporting requirements to FinSurv.
The draft would also allow individuals, subject to the proposed framework, to externalise crypto assets through authorised providers using their personal discretionary or foreign capital allowances.
The rules remain draft proposals, and SARB has invited public comments until September 30, 2026.
That makes Kastelo’s case particularly timely.
It highlights exactly the kind of regulatory grey area South Africa is now trying to formalise.
Kastelo Says It No Longer Offers the Arbitrage Service
Kastelo told Business Day that it stopped offering its crypto-arbitrage service following SARB’s blocking order, even though similar arbitrage products remain available elsewhere in the South African market.
The broader company has not been declared illegal, and the court ruling did not revoke all of its permissions or make a final determination on the legality of the company.
The dispute is specifically centred on the exchange-control investigation and the blocking order.
There Is Also a Political Dimension
Kastelo was co-founded by Mark Burke, who later entered South African politics and is currently a Democratic Alliance Member of Parliament and party finance official.
Recent reporting initially described Burke as Kastelo’s chair, but Burke has since clarified that he is not the chairperson of Kastelo Proprietary Limited and is not involved in its daily operations.
He says he resigned from Kastelo in 2024 to pursue politics and ceased chairing the broader Kastelo Group in February 2026. (Eyewitness News)
Burke has also emphasised that the High Court made no finding of wrongdoing against him or Kastelo and that he is not personally the subject of the SARB investigation.
The political connection has nevertheless increased attention on the story.
The ANC has called for Burke to be removed from Parliament’s finance-related committees while the investigation continues, while the DA says it will wait for due process and any formal regulatory findings before taking action. (ANC Parliamentary Caucus)
Those political arguments are separate from the legal question of whether Kastelo breached exchange-control regulations.
Crypto Arbitrage Is Not Automatically Illegal in South Africa
The controversy could easily create the mistaken impression that crypto arbitrage itself is prohibited.
That is not what SARB’s own published guidance says.
The Reserve Bank states that individuals may use their personal foreign-exchange allowances to purchase crypto assets abroad, provided the applicable exchange-control requirements are followed.
What the regulator explicitly objects to is using someone else’s allowance through loans or similar arrangements intended to circumvent the restrictions.
An individual independently using their own allowance to buy crypto offshore is one thing.
A company allegedly assembling thousands of individual allowances into a much larger commercial flow may raise entirely different regulatory questions.
That is essentially what SARB is now examining in the Kastelo case.
What Happens Next?
The Reserve Bank’s broader investigation remains ongoing.
The July court decision means Kastelo was unsuccessful in its attempt to have the blocking order overturned, but it does not resolve the ultimate question of whether exchange-control contraventions occurred.
Until SARB completes its investigation and any subsequent enforcement process runs its course, the allegations remain allegations.
Kastelo is entitled to continue disputing the central bank’s interpretation and defending its business model.
That is why the R4 billion figure should be described as the value of transactions linked to suspected contraventions, rather than R4 billion that has been proven to have been illegally exported.
