The U.S. Securities and Exchange Commission (SEC) has filed charges against crypto trading platform Beaxy and its executives. Additionally, the regulator alleged that the cryptocurrency exchange’s founder raised $8 million in an unregistered crypto token offering and “misappropriated at least $900,000 for personal use, including gambling.”
Beaxy is a cryptocurrency exchange platform that was established in 2019. The company claimed to provide advanced trading tools for both experienced and novice traders to exchange digital assets, including Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Ripple, and many others. The platform reportedly offered low trading fees, high security, and superb customer service. However, these features were not enough to keep the company out of legal trouble.
On Wednesday, the SEC announced that it had filed charges against Beaxy, its founder Artak Hamazaspyan, and its executives, Nicholas Murphy and Randolph Bay Abbot. The securities watchdog alleged that the defendants had violated federal securities laws by failing to register as an exchange, broker, and dealer with the Commission. The charges were reportedly based on activity that took place from 2019 to 2021.
According to the SEC, Beaxy and its affiliates performed the functions of an exchange, broker, clearing agency, and dealer without registering with the Commission and complying with clear, time-tested rules governing those activities. The regulator further alleged that Hamazaspyan raised $8 million in an unregistered offering of the Beaxy token (BXY), in which he misappropriated at least $900,000 for personal use, including gambling. The SEC also charged market makers operating on the Beaxy Platform as unregistered dealers.
In its complaint, the SEC claimed that Murphy and Abbot had been operating the Beaxy Platform since October 2019 through their management of Windy Inc. The SEC noted that the pair convinced Hamazaspyan to resign following the BXY offering.
Following the SEC enforcement action, Beaxy announced on its website that it was “regrettably” announcing the immediate suspension of its services on Beaxy Exchange. Due to the uncertain regulatory environment surrounding their business, they have made the difficult decision to cease operations. While emphasizing that they had “forthrightly committed to cooperation with the Securities and Exchange Commission (SEC) for over two years, continually providing information, data, and interviews to assist regulators in whatever manner we could,” the company stressed that the regulatory environment is just too uncertain to continue operations.
The SEC and the Department of Justice (DOJ) have been actively pursuing companies and individuals operating in the cryptocurrency space who are in violation of federal securities laws. Regulators have warned that they will not hesitate to take action against those who operate outside the bounds of the law.
Crypto regulations are still in their infancy, and the SEC has yet to establish a clear regulatory framework for the industry. As a result, there is much uncertainty surrounding digital assets and how they fit within the existing regulatory framework. The lack of clarity has made it difficult for companies like Beaxy to navigate the regulatory landscape.
The SEC’s action against Beaxy serves as a reminder that the cryptocurrency industry is not immune to regulation. Crypto exchanges and token offerings must comply with federal securities laws or face legal consequences. Companies operating in the digital asset space would do well to work closely with regulators to ensure they are in compliance with the law.
In conclusion, the SEC has taken action against Beaxy and its executives for violating federal securities laws. The charges alleged that Beaxy and its affiliates performed the functions of an exchange, broker, clearing agency, and dealer without registering with the Commission and complying with clear, time-tested rules governing those activities. The SEC also charged the founder of the platform, Artak Hamazaspyan, and a company he controlled, Beaxy Digital Ltd., with raising $8 million in an unregistered offering of the Beaxy token (BXY), in which he misappropriated at least $900,000 for personal use, including gambling. The SEC’s action against Beaxy highlights the need for digital asset companies to comply with federal securities laws and work closely with regulators to ensure they are in compliance.
