Illegal Broker Schemes – Gal Barak Points to Panda as Scheme Operator

Gal Barak, the operator of a large number of illegal and fraudulent broker schemes, has submitted a comprehensive statement to the public prosecutor’s office in Vienna via his Austrian lawyer. There is an EU arrest warrant for Gal Barak, who was released into house arrest for health reasons after his initial arrest in Sofia in February 2019. Together with his partner Marina Andreeva, he now manages the global cybercrime organization from house arrest. In our first report on the Barak statement, we covered the “betting approach”. In this report, we explain how Barak shifts the responsibility for the illegal broker business to the white-label operator Panda.

The Case History

The Israeli Gal Barak and his German partner Uwe Lenhoff were arrested after months of investigations in various EU countries. They are accused of financial crime, money laundering, and fraud. Gal Barak has been fighting his extradition to Austria for months. The Austrian authorities are coordinating the EU-wide investigation of Gal Barak and his cybercrime organization. Hence, it is not an Austrian case, but a cybercrime case on the EU level with victims in many EU member states.

Barak, Lenhoff and their other partners, the Israeli Gery Shalon and the Russian Vladislav Smirnov, jointly own and operate the white-label provider Tradologic, a competitor of PandaTS.

In his statement, Barak claims that its most recently operated illegal broker schemes such as XTraderFX were not operated with Tradologic but as a white-label solution for PandaTS. Consequently, PandaTS would be responsible for the proper conduct of the business.

Defense line – White-label provider Panda it is!

Gal Barak purports that he had relied on the Israel-based Panda Trading System (“Panda” or “PandaTS”) of Maor Lahav to be a proper company with a legit and compliant business model. As Panda’s marketing partner, he certainly did everything neatly. But he would not have had anything to do with the processing of traders or bets.

In his statement, Gal Barak tries to bill his illegal broker sites like XTraderFX or OptionStarsGlobal as a “web portal” to acquire customers for PandaTS for placing bets on future asset prices.

The procedures for customer betting are as follows: The customers acquire credit by a deposit (comparable in the “analogue world” with chips in the Casino).

Source: Gal Barak statement (translated by FinTelegram)

His web portals would only have been the frontends for the real perpetrators – the white-label providers and platform operators such as Panda (PandaTS). Actually, Panda as business owner and platform operator executed the trades (or bets) and thus have been responsible for a proper business:

In fact, the individual websites under which these bets on asset prices are offered are only the “external appearance” of the betting process behind them. In a way, they function as betting portals. The Websites are not a tool for the actual placement and execution of bets. The betting, i.e. the linking of the bet with the actual price development in accordance with the terms and conditions of business, is not carried out by the defendant or his companies, but externally. There are numerous providers who offer such a service. For example, the “Tradologic” platform or the “Panda” platform last used by the defendant. These providers are independent third parties.

Source: Gal Barak statement to prosecutors (translation by FinTelegram)

PandaTS cared about payments

In Barak’s statement to the EU prosecutors, Panda is not only the business owner and executor of trades and bets but also responsible for payouts to customer. Barak and his teams in XTraderFX only did the authorization of clients’ withdrawal requests but it was Panda which was responsible to coordinate the payments with the payment services providers (PSP):

The procedure was such that, on the basis of a payment request from the customer, the company of the defendant approved the payment and the platform operator (most recently Panda) made the payment via the payment service provider (e.g. Payvision).

 Source: Gal Barak statement to prosecutors (translation by FinTelegram)

Motion to seize Panda assets

As part of the statement, Barak requested to seize Panda data on the company’s servers in Israel and Cyprus:

REQUEST FOR EVIDENCE

to secure the relevant data with the platform operator Panda (145 Jaffa Road, Beit Galim, Floor 1 Haifa, 3525114 Israel); this to prove that all bets of the persons now presented as victims have taken place in accordance with the relevant regulations, that actual bets have been placed and not “scam investments” and that therefore there can be no fraud on the part of the defendant. The company is managing servers in Israel and Cyprus. A seizure could, therefore, be obtained by means of a European investigation order.

Source: Gal Barak motion (translated by FinTelgram)

Preliminary Conclusion

Over the past few weeks, we have already reported on the many broker scams that are operated as white label solutions. In this respect, Gal Barak’s statement has strengthened our opinion on the matter. This does not mean, however, that we believe Gal Barak’s reasoning and the reduction of his role in the fraud system around illegal brokers. In the next article, we will look in detail at the payment service providers and prove that Gal Barak and not PandaTS had control over the cash flow.