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SEC Sues Beaxy for Operating an Unregistered Securities Platform

SEC Sues Beaxy for Operating an Unregistered Securities Platform

The US Securities and Exchange Commission (SEC) has accused crypto trading platform Beaxy and its executives of operating an unregistered securities exchange, broker, and clearing agency. The platform ceased operations a day before the SEC lawsuit, according to a press release on Wednesday (March 29, 2023).

Beaxy Founder Embezzled Nearly $1M in Investor Funds

The SEC alleges that Beaxy founder, Artak Hamazaspyan, unlawfully raised $8 million in an unregistered securities offering of its native token, BXY. Hamazaspyan is also accused of embezzling $900,000 of the funds for personal use, which included gambling. Nicholas Murphy and Randolph Bay Abbott, who maintained the platform through Windy, have also been charged with violating securities laws.

The SEC charges stem from the alleged lack of distinction between exchange, broker, and clearing agency functions, which creates serious risks for investors. Brian Peterson and his companies were also implicated for unregistered dealings.

Beaxy Shuts Down Operations

Although the parties neither confirmed nor denied the SEC allegations, they agreed to close down the Beaxy platform and dismantle an unregistered exchange, clearing agency, and broker to settle the charges. Windy will also destroy all BXY tokens in its possession.

Beaxy announced the closure of its operations on March 28, a day before the SEC released its statement. The exchange stated that it had cooperated with the regulator for more than two years, but decided to shut down due to the uncertain regulatory landscape surrounding its business.

The SEC is currently litigating its charges against Hamazaspyan for securities fraud and against Hamazaspyan and Beaxy Digital for the unregistered offering of BXY. The regulator has been ramping up its clampdown on the crypto industry in recent times, previously accusing leading platforms, such as Coinbase, Kraken, Genesis, and Gemini of breaking securities laws.