Johannesburg High Court: Kastelo Crypto Arbitrage Blocked by South African Reserve Bank

• Kastelo lost its case in the Johannesburg High Court against a blocking order imposed by the South African Reserve Bank (Sarb).
• The Sarb claimed that Kastelo was contravening exchange control regulations, but Kastelo denies any wrongdoing.
• The company's business model involves purchasing crypto assets overseas and selling them in South Africa for a profit.
• Kastelo is licensed as a Category I and II financial services provider, a registered crypto asset service provider (Casp), an authorised treasury outsourcing company, and a registered credit provider.

The Sarb claimed that Kastelo was contravening exchange control regulations, but Kastelo denies any wrongdoing.

Kastelo, a crypto arbitrage company, recently lost its case in the Johannesburg High Court against a blocking order imposed by the South African Reserve Bank (Sarb). The Sarb claimed that Kastelo was contravening exchange control regulations. However, Kastelo denies any wrongdoing and asserts that it had voluntarily ceased offering crypto arbitrage services in November 2025. The company's court papers argue that the blocking order was issued without giving them an opportunity to respond ahead of time and explain their legal foundation.

The case has significant implications for the interpretation of exchange control regulations in South Africa. Kastelo is licensed as a Category I and II financial services provider, a registered crypto asset service provider (Casp), an authorised treasury outsourcing company, and a registered credit provider. The Reserve Bank's claims against Kastelo revolve around its business model, which involves purchasing crypto assets overseas and selling them in South Africa for a profit. The Sarb alleges that Kastelo was effectively renting special discretionary allowances (SDAs) at between R2 000 and R10 000 a year from clients who did not have sufficient funds to conduct arbitrage themselves.

The Johannesburg High Court's ruling on Kastelo's case sets an important precedent for the interpretation of exchange control regulations in South Africa. Lawyers should pay close attention to this development, as it may impact the way these regulations are applied in future cases. The case also highlights the need for clarity and transparency in the regulation of crypto asset service providers and other financial institutions. Kastelo's business model, which relies on purchasing and selling crypto assets, has been at the centre of controversy. While the company denies any wrongdoing, the Reserve Bank's allegations raise important questions about the risks associated with this type of activity.

Lawyers should watch for the precedent set by the Johannesburg High Court's ruling on Kastelo's case, which may impact the interpretation of exchange control regulations in South Africa.

Source: Original reporting via Moneyweb