Not even COVID-19 spared the reporters. Not the less desirable ones for legal or commercial reasons, and not the better ones for both. In April, there was a lot of agitation in Europe over the licence revocation of Bruc Bond UAB (formerly Moneta International UAB) and the resignation of the board members and founders of Payvision, the Dutch ING subsidiary. Due to their roles as payment processors for the fraudulent binary options and brokerage industries, both companies were quite controversial. The Australian company iSignthis Ltd. and its Cyprus-based affiliate, iSignthis eMoney Ltd., a regulated EU e-Money Institution, have now targeted another FinTech.
The Legacy of Binary Options
The Australian FinTech juggernaut iSignthis and its affiliated set of businesses were heavily embroiled in Israeli binary options scams, just like a plethora of other payment processors. Specifically, it appears that the organisation had a tight relationship with Israelis Yossi Herzog and Kobi Cohen, who are currently facing charges in the USA related to the Yukom Case involving the former CEO Lee Elbaz. The US Commodities Futures Trade Commission (CFTC) is looking for Cohen and Herzog for possible regulatory infractions, and the US Government is looking for them both for criminal charges. Their current location is unknown.
According to various court documents in Australia, iSignthis has facilitated broker scams like TraderQ, iTrader, iTrader Global, or OTCapital with their payment services. Behind these scams and associated with them are Herzog, Cohen, and their AGM Markets Ltd and AGM Markets Pty Ltd, as well as their Israeli compatriots Ido Fishman and Gil Yakir Bachar and their Israel, registered Gal Media Trade Ltd.
Issues with ASX, the Australian Securities Exchange
The iSignthis Group was established in 2013 as a software supplier and now markets itself as a FinTech, RechTech, and provider of banking software solutions. The group is somewhat opaque due to its numerous companies situated in several jurisdictions, each serving a distinct purpose.
The Australian iSignthis Ltd.’s shares are co-listed under the symbols ISX and TA8 on the Frankfurt Stock Exchange in addition to being listed on the Australian Securities Exchange (ASX). John Karantzis, the founder and CEO of FinTech, is regarded as a vibrant and sometimes contentious businessman. As a result of suspected infractions of compliance regulations, the ASX has already banned trading of iSignthis shares since mid-March 2020. Furthermore, the ASX claims that iSignthis is also implicated in widespread share manipulation. In the Australian Federal Court, iSignthis has requested an interim order to prevent the stoppage of trading. However, the Court rejected ISX’s request for an injunction on April 30, 2020, and mandated that ISX reimburse ASX for its costs.
Due to unresolved difficulties, trade was suspended because of the intricacy of the iSignthis corporate arrangement and the relationships and revenue streams among the various entities in various jurisdictions. These matters were the focus of ASX investigations.
Since March 2020, Karantzis, the CEO of iSignthis, has also served as the temporary CEO of National Stock Exchange (“NSX”), the rival AXS, which is the second-biggest Tier 1 market operator for securities in Australia with an ASIC licence. He consequently claims that his position with NSX is the reason for the issues with ASX.
Notice of suspension in the VISA Registry
A Principal Member of VISA and other credit card networks is iSignthis eMoney Ltd. The company is listed as “suspended by AML” in a suspension notification on the VISA Global Registry of Service Providers.
CEO Karantzis claims in a tweet that the VISA suspension is a formality. It is said that the corporation neglected to forward the PCI DSS certificate to VISA.
Another participant brought up in the pertinent Twitter threat that VISA’s suspension of ISX might also be due to the Australian Stock Exchange’s probe and negative media coverage of the company.
This does not seem like a very favourable situation for iSignthis, given the regulatory difficulties, legal conflicts with ASX, suspension of its share trading, and unresolved VISA suspension. Further data will be gathered and reported by the FinTelegram Research Team.
iSignthis (ASX:ISX, Mkt Cap A$236m) – Australian FinTech with Global Reach – Initiation of research coverage
An online identity and payment authentication provider is iSignthis (ISX). The innovative technology created by ISX satisfies the expanding demand for electronic identity verification through the internet.
Support for the technology stems from the quantity of contracts ISX has signed with international businesses. The start of revenue generating in the first quarter of 2016 will be the next catalyst.
As worldwide eCommerce transaction volume increases the traditional means of identity verification (face to face meetings for example) are limiting. The escalation of fraudulent activities and money laundering has led to heightened regulatory obligations for financial institutions and retailers.
By examining how the online verification process can be completed more quickly, more effectively, and with a lower risk of fraud (while still adhering to all legal requirements), ISX has created a new avenue for dynamic verification processes like the one that PayPal currently uses to identify and onboard its customers.
A potentially game-changing technological advancement in the crucial field of identity verification has been made by ISX. Billing for completed transactions will be the following activity.
The war for iSignthis: A fintech company fighting for its reputation, with a general missing in action
John Karantzis, the controversial fintech star, stood up for his once $1 billion ASX company iSignthis for four years.
The outspoken entrepreneur guided the company in its efforts to refute claims made by the Australian Securities and Investments Commission (ASIC) and market regulator the ASX that iSignthis had given false information to the public through letters to shareholders and venomous tweets.
The supporters of iSignthis believed that Karantzis was the major-general of the company in a conflict.
There was a lot on the line. iSignthis has expanded to the point that it is regarded as one of the top 300 listed firms, offering a range of goods designed to capitalise on the expanding realm of online transactions. This included helping groups such as cryptocurrency platforms and gaming websites to process transactions and providing oversight of anti-money laundering controls that would help weed out nefarious transactions.
However, despite the possibility of a ban looming over his head, Karantzis has not been seen since ASIC’s civil trial in the Federal Court against the firm and him last month for alleged significant and persistent violations of their duty to notify the market. He currently resides in Cyprus and continues to manage a firm that was spun off of iSignthis in 2022, vehemently disputing all of the accusations in a document submitted to the court.
Michael Borsky, KC, ASIC’s attorney, was eager to bring this up with Justice Timothy McEvoy, the judge overseeing the case.
“If Mr Karantzis ultimately turns out to give evidence, there’ll be many questions for him to answer under cross-examination,” Borsky said at the start of the trial. “If he does not, the inference will, of course, be available that his evidence could not have assisted his defence, or the companies and your honour will even more readily find that the alleged acts and omissions and alleged breaches of duties and contraventions occurred.”
Just the start of iSignthis’ troubles
As soon as ASIC and ASX employees started posing inquiries, iSignthis’ shares were taken out of trade in October 2019. This sparked a dispute with the firm and led to iSignthis filing a lawsuit against the ASX. iSignthis planned to withdraw its lawsuit against the ASX, relocate to Europe, and delist from the ASX by 2021.
The company’s issues didn’t begin with worries about how iSignthis presented its revenue.
This month, the court heard that in 2019 and 2020, the ASX and iSignthis’s commercial partner, Visa, would also claim that some of iSignthis’ new customers, who had assisted the company in recording the atypically high revenue, were connected to purported scams, unlicensed trading, and illicit gambling operations.
Additionally, Borsky informed the court that ASIC thought iSignthis had broken the law by neglecting to notify the public in a timely manner of Visa’s termination of its relationship with iSignthis in April 2020. When the news was finally revealed, it was done so in an inaccurate manner on May 24 of that year, and it remained unreported for the majority of 2020.
According to what the court heard, Visa first got in touch with iSignthis on March 6, 2020, to let it know that it was going to stop allowing it to handle Visa transactions.
The Visa letter
Borsky told the court the letter comprised a number of accusations against iSignthis and read excerpts from a letter he claimed was signed by five Visa executives.
“First, unusual transaction activity … Visa’s financial intelligence and analytics program – FIA program – had identified an unexpectedly high volume of cross-border transactions at iSignthis merchants by United States cardholders. That’s in addition to the FIA program which identified a high number of transactions with merchant category codes, often found to be associated with miscoded and or illegal gambling. Second, there was suspicious merchant activity identified by Visa in relation to iSignthis. And thirdly, Visa had identified that there had been derogatory news regarding iSignthis … which had raised concerns about our iSignthis’ governance and client portfolio.”
Borsky informed the court that Visa had cited a story published by this masthead that stated iSignthis’ largest client had received a warning from German regulator BaFin over unlawful trading.
According to Borsky, Visa said that iSignthis had not cooperated with a 2019 “attempted review” by Visa due to its worries regarding the quality of its clientele and had not replied to prior alerts from Visa regarding suspicious transactions being handled by the know-your-customer specialists.
In response to the letter, iSignthis offered to supply more details, which it duly did. However, according to Borsky, Visa sent a termination letter on April 17, 2020, which contained further allegations.
“Visa clarified that any suspicious activity discovered during its review would have been the subject of an investigation under a strong and appropriate monitoring program.”
According to Borsky, among these were: “High merchant payment volume volatility that varied significantly from month to month… Strange customer behavior patterns include a single cardholder buying thirty student travel packages, fifty travel packages, forty-three games from a website with only three freely accessible games, and fifty travel packages in a single month. There are also questionable web traffic patterns connecting iSignthis to payment pages for gambling.
