Warehouse belonging to Chinese payment terminal manufacturer raided by FBI

PAX Technology devices allegedly opening suspicious connections to Middle Kingdom

Updated US feds were spotted raiding a warehouse belonging to Chinese payment terminal manufacturer PAX Technology in Jacksonville, Florida, on Tuesday, with speculation abounding that the machines contained preinstalled malware.

PAX Technology is headquartered in Shenzhen, China, and is one of the largest electronic payment providers in the world. It operates around 60 million point-of-sale (PoS) payment terminals in more than 120 countries.

Jacksonville news anchor Courtney Cole tweeted photos of the scene:

News outlet WOKV was able to obtain a statement from the FBI confirming they were executing a court-authorized search as part of a federal investigation. The Feds said the probe was active and ongoing but did not provide a timeline.

Security buff Brian Krebs reported the raid could be tied to cyber-attacks on organizations in the US and EU, and that a major American payment processor noticed the terminals exhibiting suspicious behavior. Allegedly the machines were opening unexplained network connections to systems in China, and the data transferred didn't look like software updates or something like that.

The PAX terminals were allegedly being used to house or run malware and act as command-and-control points for staging attacks on other networks and collecting information. According to Krebs, a major financial provider in the US and in EU has already started pulling the machines and it's not just the FBI investigating – MI5 is looking into the matter, too.

With PoS machines everywhere, it's easy to overlook that the machines are computers with points of vulnerability. However, use of the technology as a malware carrier has been going on for a long time, and is rather inevitable given the items' wide geographical distribution and access to credit cards.

In 2014, Target lost control of up to 70 million US shopper's data and 40 million credit and debit cards due to an attack on their payment systems.

Just who the staging and data collection is for in this case (if Krebs turns out to be right) remains uncertain. While it is possible that the threat actor is the company itself, it may be more likely the software supply chain has been poisoned. ®

Updated to add on October 28

PAX has sent The Register the following statement:

On Tuesday, October 26, 2021, PAX Technology, Inc. in the United States was subject to an unexpected visit from the Federal Bureau of Investigation (FBI) and other government agencies relating to an apparent investigation.

PAX Technology is not aware of any illegal conduct by it or its employees and is in the process of engaging counsel to assist in learning more about the events that led to the investigation.

Separately, we are aware of media reports regarding the security of PAX Technology’s devices and services. PAX Technology takes security very seriously. As always, PAX Technology is actively monitoring its environment for possible threats. We remain committed to providing secure and quality software systems and solutions.

The company also promised to "keep our team and customers apprised of the situation," and advised that it is conducting business as usual, including at its Jacksonville office and warehouse.

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