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UNVEILING REGULATORY FAILURES AND MISCONDUCT

 

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), which is 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 after complaints were made to the Financial Ombudsman Service (FOS).

 

KEY POINTS OF THE FCA INVESTIGATION:

 

• Serious Regulatory Breaches:

  • Axis Mundi and LBX were found to violate 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 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's consent.

 

 

CONTEXT OF THE INVESTIGATION:

 

• This FCA investigation co-occurred as multiple complaints regarding Axis Mundi and LBX were submitted to the Financial Ombudsman Service (FOS).

• 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.

 

 

KEY ISSUES AND VIOLATIONS

 

• 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, and the use of promotional materials referencing non-existent Financial Services Register Numbers (FRNs) and unauthorised entities in its promotional materials.

 

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• Client Money and Asset Management

  • Unreported Client Investments: The FCA identified significant customer investments not reported to the Authority, posing a substantial risk to investors. The NatWest account statements indicated sums totalling £301,500 unaccounted for in regulatory returns.

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• UnauthorUnauthorizedal 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 authorisauthorization

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• Regulatory Non-compliance

  • Breach of CASS Rules: Axis Mundi was found to have likely breached the Client Assets Sourcebook (CASS) rules, particularly concerning handling client money and custody assets. The firm failed to maintain client money accounts and provide the 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, falsely reporting zero revenues and client assets.

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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: The firm declined to comply when invited to restrict its activities voluntarily due to regulatory concerns. This refusal further exacerbated the potential risks to investors and highlighted the firm's non-cooperative stance with regulatory authorities.

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• Promotion of High-Risk Products

  • Unregulated Mini-bonds: Axis Mundi's promotion of mini-bonds through unregulated entities like Oxville Analytics raised significant red flags. The high returns promised by these bonds (ranging from 7% to 13.5%) indicated potentially fraudulent schemes.

  • Involvement in High-risk Cryptocurrency Products: The firm's association with high-risk cryptocurrency products and unregulated promotional activities was a significant concern for the FCA, leading to further scrutiny of its operations.

 

 

CRITICISM OF THE FINANCIAL OMBUDSMAN SERVICE (FOS)

Despite the FCA's significant and ongoing investigation 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 activities, were contemporaneous with numerous complaints submitted to the FOS. The FOS's lack of action indicates a severe lapse in the FOS's duty to protect consumers and uphold regulatory standards.

 

SPECIFIC FAILINGS OF THE FOS

• 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 the financial firms involved provided, 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 money laundering and fraud suspicions 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.

 

 

EXTRA EVIDENCE AND THEIR IMPORTANCE IN THE OVERALL CASE UNVEILING FRAUDULENT ACTIVITY AND GROSS MISCONDUCT

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The following evidence consists of documents, emails, invoices, bank statements, and conversations that collectively highlight Phil Milo and Benjamin Dives' involvement 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.

 

NOTES AND WORKING DOCUMENTS OF PHIL MILO (2019-2020)

• These documents show that Phil Milo actively reviewed, checked, changed, and adjusted the terms and conditions of Axis Mundi, Maya Block, LaunchPay, and LBX.

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

 

 

EMAIL EXCHANGE BETWEEN BENJAMIN DIVES AND LIQUIDATORS

• This is 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.

 

 

CONVERSATION BETWEEN BENJAMIN DIVES AND PHIL MILO

• 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.

 

 

DISCUSSION WITH AN ASSOCIATE

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

• Dives admit their fraudulent activities and discuss manipulating the auditing process, highlighting their intent to deceive auditors and escape legal repercussions, leaving victims without recourse.

 

 

INVOICE FROM MOON SYSTEMS TO OXFIELD MANAGEMENT LTD

• An invoice indicating financial transactions between Moon Systems (controlled by Dives) and Oxfield Management Ltd. involved selling fake bonds, undermining Dives' claims of no relationship with Oxfield Management Ltd. and highlighting their collaboration in fraudulent bond sales. It reveals the financial relationship, indicating the companies were working together to share proceeds from fraudulent activities.

 

 

BANK STATEMENT SHOWING TRANSACTIONS BETWEEN MOON SYSTEMS AND OXFIELD MANAGEMENT LTD

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

 

 

EMAIL FROM AN AUDITOR QUESTIONING TRANSACTIONS

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

 

 

FCA EMAIL REQUESTING BANK ACCOUNT LIST

• Dives immediately forwarded an email from the FCA requesting a list of bank accounts operated by Axis Mundi to Milo, suggesting Milo's integral role in managing financial disclosures and handling regulatory inquiries and suggesting a coordinated effort to manage sensitive financial information and regulatory scrutiny.

 

 

CONVERSATION ABOUT KIDNEY STONES AND OFFICE HOURS

• A conversation between Dives and an associate revealed Dive's plans to delay returning funds and his intentions to evade accountability through offshore arrangements. This demonstrates ongoing fraudulent activities, deceptive tactics, and intentions to avoid legal and financial responsibility. It also highlights their link to QBF, a significant Ponzi scheme, indicating money laundering activities.

 

 

GOOGLE DOCUMENT METADATA

• Metadata showing Dives and Milo preparing a document to claim funds received by Axis Mundi for LBX indicates illegal backdating and money laundering practices, with Dives and Milo actively involved. It deliberately attempts to manipulate and cover up fraudulent actions, highlighting their culpability.

 

 

EXTRA EVIDENCE AND THEIR IMPORTANCE IN THE OVERALL CASE 

 

UNVEILING FRAUDULENT ACTIVITY AND GROSS MISCONDUCT

• The following evidence consists of documents, emails, invoices, bank statements, and conversations that collectively highlight Phil Milo and Benjamin Dives' involvement 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.

 

NOTES AND WORKING DOCUMENTS OF PHIL MILO (2019-2020)

• These documents show that Phil Milo actively reviewed, checked, changed, and adjusted the terms and conditions of Axis Mundi, Maya Block, LaunchPay, and LBX.

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

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EMAIL EXCHANGE BETWEEN BENJAMIN DIVES AND LIQUIDATORS

• The records are 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.

​

CONVERSATION BETWEEN BENJAMIN DIVES AND PHIL MILO

• 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.

​

DISCUSSION WITH AN ASSOCIATE

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

• Dives admit their fraudulent activities and discuss manipulating the auditing process, highlighting their intent to deceive auditors and escape legal repercussions, leaving victims without recourse.

 

 

INVOICE FROM MOON SYSTEMS TO OXFIELD MANAGEMENT LTD

• The invoice from Monn System to Oxfield Management Ltd revealed financial transactions between Mr Dives and Oxfield Management Ltd, which sold the fake bonds. Such a relationship undermines Dives' claims of no relationship with Oxfield Management Ltd and highlights their collaboration in fraudulent bond sales.

• Revealing such a relationship suggests cooperation between Mr Dives and Oxfield Management Ltd, and the monetary transaction indicates the sharing of the proceeds from fraudulent activities.

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BANK STATEMENT SHOWING TRANSACTIONS BETWEEN MOON SYSTEMS AND OXFIELD MANAGEMENT LTD

• A bank statement detailing transactions between various firms controlled by Mr Dives, from the firm with which Mr Dives alleged he had no relationship, including funds transferred to liquidators.

• The transactions shown in the statements suggest a financial link between the entities and the liquidators' potential complicity. They raise ethical and legal questions about the liquidation process's integrity, highlight systemic corruption, and further suggest that Mr DIves lied to the FCA about his relationship with Oxfield Management Ltd.

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EMAIL FROM AN AUDITOR QUESTIONING TRANSACTIONS

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

• Such actions illustrate Milo's deep involvement in the company's operations and decision-making processes, challenging the narrative that he was merely a third-party entity. They also highlight the financial misrepresentation and misuse of client funds.

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FCA EMAIL REQUESTING BANK ACCOUNT LIST

 

• Dives immediately forwarded an email from the FCA requesting a list of bank accounts operated by Axis Mundi to Milo. This shows Milo's integral role in managing financial disclosures and handling regulatory inquiries and suggests a coordinated effort to manage sensitive financial information and regulatory scrutiny.

​

CONVERSATION ABOUT KIDNEY STONES AND OFFICE HOURS

 

• A conversation reveals Dive's plans to delay returning funds and his intentions to evade accountability through offshore arrangements. The conversation indicated ongoing fraudulent activities, deceptive tactics, and intentions to avoid legal and financial responsibility. It highlights their link to QBF, a significant Ponzi scheme, indicating money laundering activities.

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GOOGLE DOCUMENT METADATA

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

• Such actions suggest illegal backdating and money laundering, with Dives and Milo actively involved. The company deliberately attempts to manipulate and cover up fraudulent actions, highlighting its culpability.

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LONDON BLOCK EXCHANGE SCAM: AN ANALYSIS OF THE FCA EVIDENCE

 

THE LBX FRAUDULENT ACTIVITY AND GROSS MISCONDUCT

The evidence collectively paints a picture of a sophisticated and coordinated fraud involving multiple entities and critical individuals like Phil Milo and Benjamin Dives. The following points summarise the overarching scam and its implications:

 

MANIPULATION AND MISREPRESENTATION:

• The evidence reveals that Phil Milo and Benjamin Dives manipulated documents, financial records, and regulatory submissions to mislead regulators, auditors, and clients. This manipulation aimed to cover up the true nature of their operations and the misuse of client funds.

• The fraudulent activities included backdating documents, falsifying ISINs and bond documentation, and providing false information to regulatory bodies such as the FCA.

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UNAUTHORUNAUTHORIZEDG OF CLIENT FUNDS:

• Despite claims to the contrary, Axis Mundi and associated entities were found to be mishandling client money, including passing client funds through undesignated accounts and using these funds for personal and business expenses.

• The failure to segregate client money and maintain proper records violated CASS rules and posed significant risks to investors.

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SYSTEMATIC FRAUD AND FINANCIAL MISCONDUCT:

• The evidence indicates a systematic approach to fraud involving creating and selling fake bonds, mismanaging client assets, and deliberately evading regulatory scrutiny.

• Financial transactions between related entities like Moon Systems and Oxfield Management Ltd. further highlight the fraud's interconnected nature and the collaborative effort to deceive investors and regulators.

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REGULATORY EVASION AND ETHICAL VIOLATIONS:

• The close relationship between Milo and Dives, as evidenced by their communications and joint activities, underscores the concerted effort to manage and manipulate company policies and procedures.

• This relationship extended to influencing auditors and regulatory inquiries, with Dives and Milo working together to present false narratives and evade accountability.

 

IMPACT ON VICTIMS AND THE NEED FOR REFORM:

• The fraudulent activities severely impacted victims, who were misled and defrauded and left without recourse. The casual dismissal of their exploitation, as seen in the conversations between Dives and Milo, highlights the need for more robust consumer protection measures.

• Systemic failures within regulatory bodies, including the FCA and FOS, allowed these fraudulent activities to persist. Comprehensive reforms are needed to ensure regulatory frameworks protect consumers and hold perpetrators accountable.

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EVIDENCE OF FRAUD AND MISCONDUCT: UNCOVERING THE ROLES OF P MILO AND B DIVES IN AXIS MUNDI & LBX

• This report clarifies that Phil Milo and Benjamin Dives' systemic failures and deliberate fraudulent activities have far-reaching implications. Their roles in manipulating financial records, misleading regulatory authorities, and exploiting vulnerable individuals highlight the urgent need for comprehensive investigations and regulatory reforms to protect consumers and ensure the economic system's integrity.