Kastelo, a South African fintech and crypto arbitrage company founded by Democratic Alliance (DA) Federal Finance Chairperson Mark Burke, is facing scrutiny from the South African Reserve Bank (SARB) over alleged exchange-control violations. The Reserve Bank claims Kastelo’s business model may have helped move billions of rand offshore through clients’ foreign investment allowances.
The allegations form part of an ongoing investigation into the company’s crypto arbitrage operations. Kastelo has rejected the allegations. The company says it acted on behalf of clients, used their owners investment allowances, and provided the required mandates and information before conducting the transactions.
Why Kastelo Crypto Firm Faces Allegations
The dispute centres on Kastelo’s crypto arbitrage service. Crypto arbitrage involves buying an asset in one market and selling it in another market at a higher price. In South Africa, Bitcoin has often traded at a premium to dollar-priced offshore markets. That price difference can create an opportunity for traders. Kastelo built a service around this opportunity.
The company helped clients use their offshore investment allowances to participate in crypto arbitrage. It then handled the administrative and trading process on their behalf. However, the SARB’s Financial Surveillance Department (FinSurv) questioned whether the structure complied with South Africa’s exchange-control rules. The Reserve Bank’s investigator, André Malherbe, said the investigation uncovered a reasonable suspicion of exchange-control contraventions involving about R4 billion.
What the Reserve Bank Alleges Against Kastelo
A major issue involves South Africa’s foreign investment allowances. Residents can use a Single Discretionary Allowance (SDA) for certain offshore transactions. They can also use a Foreign Investment Allowance (FIA) for larger offshore investments. The Reserve Bank alleges that Kastelo used clients’ SDAs and FIAs to facilitate offshore transactions for its own benefit.
According to the SARB affidavit, the company’s portfolio included about R891 million in individual SDAs and R8.9 billion in individual FIAs. The funds were converted into foreign currency and used for offshore investments, including crypto arbitrage. The Reserve Bank also alleges that some clients received incentives to use their allowances. It further claims that some clients did not fully understand the transactions carried out in their names. These allegations remain part of the SARB investigation. Kastelo disputes the Reserve Bank’s characterisation of its business model.
Kastelo Says Clients Understood the Arrangement
Kastelo has defended its operations. The company said clients received information about the arbitrage service before they signed up. It also said clients received mandates and agreements that explained the process. According to Kastelo, these documents covered the opening and closing of local and foreign accounts for investment purposes.
The company said it administered the trades under discretionary mandates and charged clients fees for the service. Kastelo also rejected claims that it exchanged bonuses for clients’ investment allowances. The company said it helped ordinary South Africans access offshore investment opportunities that would otherwise be difficult to use.
It described the service as a way to make crypto arbitrage more accessible to clients who lacked the expertise or infrastructure to conduct the trades themselves.
R4 Billion in Transactions Came Under Scrutiny
The scale of Kastelo’s transactions has attracted significant attention. The Reserve Bank says its review found suspected exchange-control contraventions worth about R4 billion. The figure relates to cross-border foreign exchange transactions linked to Kastelo’s business model. The SARB alleges that Kastelo bought and sold foreign currency for its own account or indirectly controlled foreign-currency flows.
It also questioned whether transactions took place directly between authorised dealers and clients, as required. The regulator further accused the company of misrepresenting aspects of its activities in compliance declarations.Kastelo disputes these allegations.
Kastelo’s Bank Accounts Were Frozen
The dispute escalated in November 2025. On November 24, 2025, the SARB’s Financial Surveillance Department issued a blocking order to Access Bank. The order restricted withdrawals from a Kastelo bank account. The company challenged the action in court.
Its first urgent application to unfreeze the account was struck from the roll after the High Court found that Kastelo had not established the required urgency. Kastelo later brought another application to review the Reserve Bank’s action. The Johannesburg High Court dismissed that application in July 2026.
High Court Did Not Decide Whether Kastelo Broke the Law
The court ruling requires an important distinction. The July judgment dealt with Kastelo’s challenge to the Reserve Bank’s administrative action. It did not amount to a final criminal or regulatory finding that the company had violated exchange-control laws. Kastelo stressed this point after the judgment.
The company said the court addressed whether the SARB followed the correct administrative process when it blocked the account. It maintained that the court did not make a finding on the merits of the alleged exchange-control violations. The SARB’s investigation remains ongoing. The central bank also declined to confirm whether it is investigating Mark Burke or his brother Nicholas Burke in their personal capacities.
Mark Burke’s Role at Kastelo
The case has attracted additional attention because of Kastelo’s connection to Mark Burke. Burke co-founded Kastelo and served as its CEO until June 2024. He later entered Parliament after the 2024 elections and became the DA’s Federal Finance Chairperson in April 2026. His brother, Nicholas Burke, took over as Kastelo CEO in 2024.
Kastelo said Mark Burke stepped down as chairman in February 2026. The company also said he still holds an indirect interest in the group but no longer has an executive or non-executive role. Mark Burke did not comment personally on the allegations. Kastelo responded to questions on the matter.
Kastelo Has Paused Its Crypto Arbitrage Service
Kastelo has also stopped offering its crypto arbitrage service. The company said it voluntarily paused the service after the SARB blocked its bank account. It maintains that the pause was a precaution while the investigation continues. Kastelo also says it remains operational and continues to provide other services under its existing licences and authorisations.
The company has therefore not presented the situation as an exit from financial technology or cryptocurrency.Instead, it says it is continuing to operate while the regulatory dispute plays out.
Why the Case Matters for Crypto in South Africa
The Kastelo dispute highlights a broader issue for South Africa’s crypto industry.Crypto transactions may involve more than digital asset rules. They can also intersect with exchange-control, banking, tax, and foreign-exchange regulations. This became even clearer in June 2026 when the Johannesburg High Court ruled that cryptocurrency can constitute both “money” and “capital” under South Africa’s Exchange Control Regulations.
The case involved the movement of about 1,680 Bitcoin worth roughly R182 million to offshore crypto exchanges. The ruling has important implications for South Africans moving crypto across borders. It shows that crypto transactions can fall within existing financial rules even when the asset itself operates on a blockchain.
Exchange Controls Are Becoming More Important
South Africa’s exchange-control framework is designed to manage the movement of capital across its borders. The SARB has previously warned that its rules do not allow certain cross-border transactions involving crypto assets without appropriate permission. Its guidance says residents can purchase crypto assets abroad through their applicable allowances, but transactions must still comply with exchange-control requirements.
This creates a complex environment for businesses that combine crypto trading with foreign exchange. Companies must understand not only how crypto markets work but also how South Africa regulates the movement of money and capital. Kastelo’s case illustrates the risks that can arise when those areas overlap.
The Case Could Shape Crypto Arbitrage Services
Crypto arbitrage itself is not the central issue. The concern is how companies structure the transactions around it. A business can identify a legitimate price difference between two markets. However, moving capital offshore to exploit that difference can trigger additional regulatory requirements.
The Kastelo case could therefore become an important reference point for other companies offering similar services. It may encourage crypto businesses to review their transaction structures, client mandates, foreign-exchange processes, and compliance systems. It could also push regulators to provide clearer guidance for crypto-related cross-border transactions.
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Editorial Takeaway
The Kastelo case shows how closely crypto can intersect with traditional financial regulation. The South African Reserve Bank alleges that Kastelo’s business model helped circumvent exchange controls and involved about R4 billion in suspected contraventions. Kastelo strongly disputes that characterisation and says it operated with client mandates and within the law.
The High Court has so far ruled on Kastelo’s challenge to the Reserve Bank’s account-blocking action. It has not delivered a final finding that the company committed the alleged exchange-control violations. With the SARB investigation still ongoing, the case could have wider implications for crypto arbitrage and cross-border digital asset transactions in South Africa.
