Securities and Exchange Commission (SEC) violations in the crypto industry show no signs of slowing down. Regulators continue to target companies and key players in the sector. In its latest move, the SEC has submitted charges against Beaxy, a cryptocurrency platform, and its executives.
The SEC alleged that Beaxy failed to register as a national securities exchange, broker, and clearing agent, resulting in a violation of securities laws.
Crypto Platform Beaxy Charged by SEC
The founder of Beaxy, Artak Hamazaspyan, and his company, Beaxy Digital Ltd., were accused by the SEC of conducting an unregistered offering of the beaxy token (BXY) and misappropriating $900,000 for personal use, according to the SEC, including gambling.
Furthermore, the SEC has charged market makers operating on the Beaxy platform as “unregistered dealers. The charges indicate that market makers have failed to comply with registration requirements, which are implemented to protect investors and ensure market integrity.
Additionally, the SEC complaint targets Nicholas Murphy and Randolph Bay Abbott, who manage Windy Inc. The complaint alleges that Windy provides the Beaxy platform. This web-based trading platform facilitates the buying and selling of crypto assets that are offered and allegedly traded as securities since October 2019.
The SEC complaint also alleges that Windy, through the Beaxy platform, violated the Securities Exchange Act, which regulates the trading of securities and other aspects of the securities market in the United States.
The complaint further alleges that Murphy and Abbott convinced Hamazaspyan to withdraw from the Beaxy platform following the unregistered BXY offering and misappropriation of investor assets. However, the complaint indicated that Murphy and Abbott continued to operate the Beaxy over-the-air platform, which they managed.
As a result, the SEC stated that Murphy and Abbott were also responsible for operating unregistered exchanges, brokers, and clearing agents.
SEC Not Slowing Down
The SEC said that in December 2019, Windy agreed with Brian Peterson and his company, collectively known as Braverock Entities, to provide market-making services for Beaxy tokens, which were offered and sold as securities, according to regulators.
The complaint further alleges that one of these companies entered into a similar market-making agreement for other crypto assets in May 2020. According to the SEC, by providing market-making services and acting as an intermediary in the purchase and sale of securities without registration, Peterson and the Braverock Entities acted as traders. which is not registered.
According to the SEC, without admitting or denying the allegations, Windy, Murphy, Abbott, Peterson, and the Braverock Entity have agreed to a permanent injunction prohibiting them from violating securities laws in the future and to pay civil penalties. Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, claimed:
When crypto intermediaries combine all these functions under one roof—as we have shown Beaxy—investors are at serious risk. Blurred functionality and lack of registration means that regulations designed to protect investors are not followed or recognized by Beaxy.
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