The issue is modprobe and iptables don't work inside an LXC Container.
LXC is the userspace control package for Linux Containers, a lightweight virtual system mechanism sometimes described as “chroot on steroids”.
iptables error inside the container is:
# iptables -I INPUT -s 126.96.36.199 -j DROP > iptables v1.4.8: can't initialize iptables table `filter': Table does not exist (do you need to insmod?) Perhaps iptables or your kernel needs to be upgraded.
I am guessing that it can't work because the LXC containers share one kernel, the main server kernel.
How do I do fail2ban in this case. modprobe and iptables work in the main server so I could install it there and link to the logfiles somehow, my guess?