Operation Dixon:AN INVESTIGATION ON THE AXIS MUNDI SCAM & THE LBX FRAUD

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The document is a comprehensive investigation report by the Financial Conduct Authority (FCA) into the activities of Axis Mundi Global Custody Ltd (formerly LBX Custody Ltd) part of the LBX Group. 

The investigation covers the firm's regulatory compliance, client asset management, and promotional activities. 

The document highlights numerous concerns and violations related to the firm's operations, revealing systemic issues that persisted even as complaints were being made to the Financial Ombudsman Service (FOS). 

• Serious Regulatory Breaches:
  • Axis Mundi and LBX were found to be in violation of multiple regulatory standards.
  • Mismanagement of client funds was a significant issue, with client money being handled through undesignated accounts.
  • The firm failed to segregate client money as required by the Client Assets Sourcebook (CASS) rules.

• Lack of Compliance Officers:
  • The firm did not appoint the necessary compliance officers to ensure adherence to regulatory obligations.
  • This failure compromised the firm's ability to manage risks and ensure regulatory compliance.

• Provision of Misleading Information:
  • Axis Mundi and LBX provided false and misleading information to the FCA.
  • Despite denying the handling of client money, evidence showed that the firms were indeed managing client funds improperly.

• Imposed Restrictions by the FCA:
  • The FCA imposed immediate restrictions on the operations of Axis Mundi.
  • The firm was prohibited from accepting deposits and dealing with client funds without FCA consent.

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• This FCA investigation was taking place at the same time as multiple complaints were being submitted to the Financial Ombudsman Service (FOS) regarding Axis Mundi and LBX.

• Despite the ongoing investigation and the substantial evidence of misconduct, the FOS failed to take appropriate action on these complaints, further demonstrating systemic issues within the financial regulatory framework.

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• Misrepresentation and False Information
  • False ISINs and Bond Documentation: Axis Mundi was found to have issued documents for the 3 Oxville mini-bonds that falsely claimed unique ISINs (International Securities Identification Numbers) which did not exist. This misleading information suggested that the bonds were tradeable on exchanges when they were not.
  • Non-existent Authorizations: The firm referenced non-existent Financial Services Register Numbers (FRNs) and unauthorized entities in its promotional materials.

• Client Money and Asset Management
  • Unreported Client Investments: The FCA identified significant amounts of customer investments that were not reported to the Authority, posing a substantial risk to investors. The NatWest account statements indicated sums totaling £301,500 that were unaccounted for in regulatory returns.

• Unauthorized Custodial Activities: Despite the firm's claims of not holding client assets, the FCA found evidence of custodial activities, including numerous payments to investors from a Starling GBP account. These payments were documented as coupon or interest payments, indicating the firm was acting as a custodian without proper authorisation.

• Regulatory Non-compliance
  • Breach of CASS Rules: Axis Mundi was found to have likely breached the Client Assets Sourcebook (CASS) rules, particularly concerning the handling of client money and custody assets. The firm failed to maintain proper client money accounts and provide necessary documentation to the FCA's CASS Supervision team .
  • Misleading Regulatory Status: Throughout the investigation, the firm consistently denied conducting regulated activities despite evidence to the contrary. This misrepresentation extended to the firm's regulatory returns, which falsely reported zero revenues and client assets.

• Failure to Address Regulatory Concerns
  • Unfulfilled SMF Roles: The firm repeatedly failed to appoint and maintain Senior Management Function (SMF) roles as required by the FCA. Applications for these positions were either withdrawn or left unaddressed, contributing to a lack of proper oversight and governance within the firm .
  • Refusal to Voluntarily Restrict Activities: When invited to voluntarily restrict its activities due to regulatory concerns, the firm declined to comply. This refusal further exacerbated the potential risks to investors and highlighted the firm's non-cooperative stance with regulatory authorities.

• Promotion of High-Risk Products
  • Unregulated Mini-bonds: The promotion of mini-bonds by Axis Mundi through unregulated entities like Oxville Analytics raised significant red flags. The high returns promised by these bonds (ranging from 7% to 13.5%) were indicative of potentially fraudulent schemes .
  • Involvement in High-risk Cryptocurrency Products: The firm's association with high-risk cryptocurrency products and unregulated promotional activities was a major concern for the FCA, leading to further scrutiny of its operations.

The Axis Mundi Scam & the LBX Fraud

Despite the significant and ongoing investigation by the FCA into Axis Mundi, the FOS failed to act on multiple complaints regarding the same firm. The FCA's findings, which included clear evidence of misrepresentation, regulatory breaches, and unauthorised custodial activities, were contemporaneous with numerous complaints submitted to the FOS. This indicates a serious lapse in the FOS's duty to protect consumers and uphold regulatory standards.

The Axis Mundi Scam & the LBX Fraud

• Ignoring Substantial Evidence: The FOS dismissed complaints and evidence provided by victims, including detailed documentation of fraud and misconduct by Axis Mundi. This inaction allowed the firm to continue its fraudulent activities unchallenged.

• Lack of Proper Verification: The FOS relied heavily on information provided by the financial firms involved, often without proper verification. This blind trust in the firms' statements led to unjust dismissals of legitimate complaints.

• Failure to Report Suspicious Activities: The FOS did not report suspicions of money laundering and fraud to the appropriate authorities, as required by law. This omission further compromised the integrity of the financial system.

• Inadequate Complaint Handling: The FOS's handling of complaints was marked by superficial responses and a failure to address the core issues. Victims were left without recourse and faced significant financial and emotional distress.

• Systemic Inaction: The FOS's systemic failure to act on clear evidence of fraud, coupled with the FCA's ongoing investigation, highlights a broken regulatory framework that fails to protect consumers effectively.

The Axis Mundi Scam & the LBX Fraud

The following evidence consists of documents, emails, invoices, bank statements, and conversations that collectively highlight the involvement of Phil Milo and Benjamin Dives in the operations and strategic decisions of Axis Mundi Global Custody Ltd, LBX (London Block Exchange), Maya Block, and LaunchPay. 

These pieces of evidence are critical in demonstrating the depth of their involvement and the systematic fraud perpetrated by these entities.

The Axis Mundi Scam & the LBX Fraud

• These documents show that Phil Milo was actively reviewing, checking, changing, and adjusting the terms and conditions of Axis Mundi, Maya Block, LaunchPay, and LBX.

• This contradicts claims by the FCA, administrators, and liquidators that Milo was a third-party individual. The documents illustrate Milo's significant involvement in the strategic decisions and operations of these companies, influencing business practices and potentially their legal compliance. This direct engagement suggests a deeper role than previously acknowledged and indicates the need for a thorough investigation into his responsibilities and actions.

• An email conversation between Benjamin Dives and the liquidators of Axis Mundi regarding a letter of demand from a client's solicitors.

• This exchange highlights the handling of creditor claims during the liquidation process. Dives' ambiguous response about the claimant's creditor status reflects the complexities and potential mishandling of creditor claims, raising questions about transparency and accountability in the liquidation process.

• A conversation revealing Dives and Milo's attitudes towards their unethical practices, including a comment about "scamming old ladies."

• This exchange underscores their casual dismissal of exploiting vulnerable individuals and acknowledges their fraudulent activities. It highlights their awareness of the impact on victims and reinforces concerns about deliberate and systematic misconduct.

• A conversation between Dives and a marketing associate about the outcome of their legal issues depending on the auditors' opinion.

• Dives admits their fraudulent activities and discusses manipulating the auditing process. This highlights their intent to deceive auditors and escape legal repercussions, leaving victims without recourse.

• An invoice indicating financial transactions between Moon Systems (controlled by Dives) and Oxfield Management Ltd, involved in selling fake bonds.

• This undermines Dives' claims of no relationship with Oxfield Management Ltd and highlights their collaboration in fraudulent bond sales. It reveals the financial relationship, indicating the companies were working together to share proceeds from fraudulent activities.

• A bank statement detailing transactions, including funds transferred to liquidators.

• This shows the financial link between the entities and suggests the liquidators' potential complicity. It raises ethical and legal questions about the liquidation process's integrity and highlights systemic corruption.

• An email from an auditor questioning transactions, forwarded by Dives to Milo.

• This illustrates Milo's deep involvement in the company's operations and decision-making processes, challenging the narrative that he was merely a third-party entity. It highlights the financial misrepresentation and misuse of client funds.

• An email from the FCA requesting a list of bank accounts operated by Axis Mundi, immediately forwarded by Dives to Milo.

• This shows Milo's integral role in managing financial disclosures and handling regulatory inquiries. It suggests a coordinated effort to manage sensitive financial information and regulatory scrutiny.

• A conversation revealing Dives  plans to delay returning funds and his intentions to evade accountability through offshore arrangements.

• This demonstrates ongoing fraudulent activities, deceptive tactics, and intentions to evade legal and financial accountability. It highlights their link to QBF, a significant Ponzi scheme, indicating money laundering activities.

The Axis Mundi Scam & the LBX Fraud

• Metadata showing Dives and Milo preparing a document to claim funds received by Axis Mundi were for LBX.

• This indicates illegal backdating and money laundering practices, with both Dives and Milo actively involved. It shows a deliberate attempt to manipulate and cover up fraudulent actions, highlighting their culpability.

The Axis Mundi Scam & the LBX Fraud