It is said that the exchange exposed its users to a very significant risk by combining several aspects of its operations that should have been registered and operated separately.
The United States Securities and Exchange Commission (SEC) has charged Beaxy cryptocurrency trading platform for operating in the US as an unregistered platform. According to the regulator, Beaxy as well as its associates violated the Securities Act.
The charges levied against Beaxy were also extended to its executive, Artak Hamazaspyan, featuring the raise of a total of $8 million in an unregistered offering of the BXY token. The SEC said Artak misappropriated the funds including using about $900,000 on gambling.
“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,” said SEC Chair Gary Gensler. “Our securities laws for decades have served to protect investors, make capital formation easier and cheaper, and improve our markets. This case serves as yet another reminder to crypto intermediaries that their business models must comply and adapt to the law, not the other way around.”
SEC Chair Gary Gensler has always maintained that there are securities laws that apply specifically to crypto entities that must be followed. The commission has come under fire several times this year following its series of enforcement actions with the latest being the Wells Notice issued to Coinbase Global Inc (NASDAQ: COIN).
Whether or not the criticisms are due, Gensler is a strong advocate of protecting investors and it is doing so with Beaxy. Per the charges, the SEC claimed a separate platform, Windy Inc, and its executives, Nicholas Murphy and Randolph Bay Abbott also joined Beaxy in violating the Securities Exchange Act of 1934.
Windy was indicted for facilitating the buying and selling of crypto assets that were offered and sold as securities.
Beaxy Put Investors at Serious Risk, SEC Official Says
In the complaint brought against the company, Gurbir S. Grewal, Director of the SEC’s Division of Enforcement said the exchange exposed its users to a very significant risk by combining several aspects of its operations that should have been registered and operated separately.
“To protect investors, there are separate registration requirements for exchanges, brokers, and clearing agencies, with each essentially acting as a check on the other,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “When a crypto intermediary combines all of these functions under one roof—as we allege that Beaxy did—investors are at serious risk. The blurring of functions and the lack of registrations meant that regulations designed to protect investors were not followed or even recognized by Beaxy.”
While the SEC said it is litigating its charges against Hamazaspyan for securities fraud and against Hamazaspyan and Beaxy Digital for the unregistered offering of BXY, it said the other indicted parties including Windy, Arbot, and Randolph have agreed to settlements that will prevent them from further violating the securities.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
