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FBI raids Chinese POS business following cyber attack claims

The business has been accused of selling terminals that acted as malware droppers and C2 servers

The FBI has raided the Jacksonville warehouse of a Chinese point of sale (POS) terminal vendor after reports that the terminals were being used as part of a network distributing malware.

The company in question, PAX Technology, is based in Shenzhen, China. FBI agents executed a court-authorized search at the firm’s warehouse in Jacksonville, Florida.

In a statement to Jacksonville-based, the FBI said that in partnership with Homeland Security Investigations, Customs and Border Protection, Department of Commerce, and Naval Criminal Investigative Services, and with the support of the Jacksonville Sheriff’s Office, it executed “a court-authorized search at this location in furtherance of a federal investigation”.

“We are not aware of any physical threat to the surrounding community related to this search. The investigation remains active and ongoing and no additional information can be confirmed at this time.”

According to a report by Krebs on Security, the FBI began investigating PAX after a major US payment processor started asking questions about unusual network packets originating from the company’s payment terminals.

A source told the publication that the payment processor found that the PAX terminals were being used both as a malware dropper and a C2 server for staging attacks and collecting information.

The source also said that two financial providers, one in the US and one in the UK, had begun removing PAX terminals from the payment infrastructure, adding that that there was proof that these terminals were used to mount cyber attacks.

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“The packet sizes don’t match the payment data they should be sending, nor does it correlate with telemetry these devices might display if they were updating their software. PAX is now claiming that the investigation is racially and politically motivated,” the source told Krebs on Security.

FBI agents are also investigating at the company’s other location in Jacksonville. Shares of PAX plunged 43.3% in Hong Kong and stopped trading on news of the raid. PAX is the third-largest provider of electronic payment terminals in the world, after Florida-based Verifone and France's Ingenico.

As reported in IT Pro, the retail sector is a top target for cyber criminals as retailers have access to a wealth of sensitive data about their customers, who use often-repeated login details for their accounts.

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