Beaxy suspended operations on March 28 “due to the uncertain regulatory environment surrounding our business,” according to the cryptocurrency exchange’s blog. The suspension came a day before the United States Securities and Exchange Commission (SEC) announced that Beaxy and its executives did not register as a national securities exchange, broker and clearing agency.
The SEC also said it charged Beaxy founder Artak Hamazaspyan and Beaxy Digital, a controlled company, with raising $8 million through an unregistered Beaxy (BXY) token offering and Hamazaspyan’s misappropriation of $900,000 of investor funds for personal use.
In addition to these fees, the agency charged market makers operating on the Beaxy platform as unregistered dealers. SEC Chairman Gary Gensler said in a statement:
“We say that Beaxy and its affiliates perform the functions of exchanges, brokers, clearing agents, and dealers without registering with the Commission and complying with the clear and time-tested rules governing these activities.”
The SEC said it filed charges against Hamazaspyan for securities fraud and against Hamazaspyan and Beaxy Digital for the unregistered offering of BXY. According to his LinkedIn profile, Hamazaspyan left Beaxy in September 2019 and settled in Yerevan, Armenia.
The SEC is constantly building a body of legal theory to target crypto asset intermediaries. It’s not just an exchange of focus. Beaxy’s complaint indicates the SEC is examining market-making arrangements as broker-dealer activities and certain captive arrangements as clearing activities.
— Mike Selig (@MikeSeligEsq) March 29, 2023
The SEC also alleged that Windy Inc., which ran the exchange after Hamazaspyan’s departure, and exchange co-presidents Nicholas Murphy and Randolph Bay Abbott committed securities violations. Beaxy chairman Brian Peterson and companies associated with him are alleged to be acting as unregistered traders.
Related: Beaxy Launches Crypto Trading Platform Despite Employee Hacked Last Month
The SEC complaint, filed in the US District Court of the Northern District of Illinois in Chicago, contains eight allegations against Hamazaspyan, Murphy, Abbott and Peterson, as well as the companies Windy Inc., Beaxy Digital, Braverock Investments, Future Digital Market, Windy Financial and Future Financial .
The SEC said in a statement that it has obtained a consent decree from Windy Inc., Murphy, Abbott and Peterson who are obligated to stop all exchange activities, close the Beaxy platform, provide accounting records, return assets and customer funds and destroy any BXY. owned by Windy Inc. He also agreed to pay a fine and disgorgement.
Beaxy referred questions to the Ice Miller law firm. Partners Yankun Guo and Timothy Belevetz told Cointelegraph:
“Our clients are happy to solve this problem and look forward to the continued development of cryptocurrency and blockchain, and their integration into globally regulated markets.”
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