The Financial Conduct Authority (FCA) has warned consumers and businesses about fintech company Black Banx.
The FCA explains in an announcement: “We believe this firm may be providing financial services or products in the UK without our authorisation.”
It adds: “You will not have access to the Financial Ombudsman Service or be protected by the Financial Services Compensation Scheme (FSCS), so you are unlikely to get your money back if things go wrong.”
Black Banx (formerly known as WB21) offers digital banking and cryptocurrency solutions to private and business clients. It is officially headquartered in Toronto, according to its LinkedIn page. Based on the FCA announcement, it also has a registered address in London.
The bank says it has eight million customers and $10 billion (£7.6 billion) in monthly transaction volume.
However, the fintech firm is notable for the complaints on Twitter about missing money and its history of fraud.
To keep the long list of unpleasant events brief, the bank is run by German national Michael Gastauer (Founder and CEO). An article by Gründerszene describes how a Swiss court sentenced Gastauer to 18 months in prison for fraud – and court documents called him “a shameless parasite”.
In 2019, Black Banx fraudulently claimed it offered a Visa card, but on investigation it was discovered that it was not accredited by Visa. The bank was asked to remove the logo from the card, and the tweets and info from the Black Banx website.
Last month the US Securities and Exchange Commission (SEC) obtained a final judgement in a Federal Court in Boston, Massachusetts – and Gastauer and his bank were involved.
The case commenced in October 2018, when the SEC filed a complaint for microcap securities fraud against Black Ban’s client Roger Knox and his company Wintercap SA. The SEC alleged the US entities of Black Banx and Gastauer personally as the group’s CEO aided and abetted Knox by providing bank accounts to send and receive payments derived from the alleged illegal securities trading. Notably, the SEC proceedings are civil proceedings. No criminal charges have been filed against Black Banx nor any of its employees.
Black Banx denied the allegations and claimed neither Gastauer nor Black Banx as a licensed financial institution had any knowledge of Knox violating US securities laws. Contesting the lack of personal jurisdiction and lack of valid service, and following the advice of his legal team, Gastauer did not participate in the US court proceedings. In parallel proceedings Black Banx’s US-based entities are opposing the SEC’s claim.
The judgement ordered Gastauer to pay $17 million (£13 million). The SEC had sought to recover £165 million (£126 million) plus fines and penalties from Gastauer.
On Twitter, Gastauer comments: “Dear SEC, given your reputation to fine people for their Twitter tweets and forcing them into settlements, I can only say I refused to settle with you in order to tell the world how the SEC uses extortion, abusing its power.”
UPDATE: On 20 June, Black Banx contacted eWeek UK to point out that the FCA warning had been removed.
The link now shows ‘page not found’.
Black Banx explains: “The FCA has now accepted that Black Banx was not providing financial services or products in the UK without FCA authorisation and has withdrawn its warning.”
eWeek UK has contacted the FCA to find out the reasons for this sudden and unexplained event.
