Home > Exchanges > Beaxy exchange shutters after SEC presses multiple charges against founder, execs

Beaxy exchange shutters after SEC presses multiple charges against founder, execs

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 it was charging Beaxy and its executives with failing to register as a national securities exchange, broker and clearing agency. 

The SEC also said it was charging Beaxy founder Artak Hamazaspyan and Beaxy Digital, a company he controls, with raising $8 million through an unregistered offering of the Beaxy token (BXY) and misappropriation by Hamazaspyan of $900,000 of investor funds for personal uses.

In addition to those charges, the agency is charging market makers operating on the Beaxy platform as unregistered dealers. SEC chair Gary Gensler said in a statement:

“We allege 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 said is litigating its charges against Hamazaspyan for securities fraud and against Hamazaspyan and Beaxy Digital for the unregistered BXY offering. According to his LinkedIn profile, Hamazaspyan left Beaxy in September 2019 and is located in Yerevan, Armenia.

The SEC has also alleged that Windy Inc., which operated the exchange after the departure of Hamazaspyan, and exchange co-presidents Nicholas Murphy and Randolph Bay Abbott committed securities violations. Beaxy chairman Brian Peterson and companies associated with him allegedly acted as unregistered dealers.

Related: Beaxy Launches Crypto Trading Platform Despite Hack of Employee Last Month

The SEC complaint, filed in the U.S. District Court of the Northern District of Illinois in Chicago, contains eight counts against Hamazaspyan, Murphy, Abbott and Peterson, as well as companies Windy Inc., Beaxy Digital, Braverock Investments, Future Digital Markets, Windy Financial and Future Financial. 

The SEC said in its statement that it had obtained consent decrees from Windy Inc., Murphy, Abbott and Peterson that obligate them to cease all exchange activities, close down the Beaxy platform, provide accounting records, return customer assets and funds and destroy any BXY in Windy Inc.’s possession. They also agreed to pay penalties and disgorgements.

Beaxy referred enquiries to the Ice Miller law firm. Partners Yankun Guo and Timothy Belevetz told Cointelegraph:

“Our clients are pleased to have put this matter behind them and are looking forward to the continuing development of cryptocurrency and blockchain, and its integration into globally regulated markets.”

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