• The US Securities and Exchange Commission (SEC) has accused Beaxy, a crypto trading platform, of running an unregistered securities exchange, broker, and clearing agency.
• Beaxy’s founder was also alleged to have unlawfully raised $8 million in an unregistered securities offering of its native token BXY.
• In addition, Artak Hamazaspyan allegedly misappropriated nearly $1 million in investor funds for personal use.
The SEC Sues Beaxy Over Unregistered Services
The US Securities and Exchange Commission (SEC) has charged crypto trading platform Beaxy and its executives with running an unregistered securities exchange, broker and clearing agency. According to the SEC complaint, Beaxy functioned as an exchange, a broker and a clearing agency without registering all three services.
Beaxy Founder Misappropriates Investor Funds
In addition to the charges against the platform’s executives, the SEC alleges that Beaxy founder Artak Hamazaspyan unlawfully raised $8 million in an unregistered securities offering of its native token BXY. Furthermore, Hamazaspyan is accused of misappropriating nearly $900,000 of those funds for his personal use – including gambling activities.
Nicholas Murphy & Randolph Bay Abbott Take Over
Following Hamazaspyan’s stepping down after the token sale and embezzlement scandal, Nicholas Murphy and Randolph Bay Abbott took over operating the platform through Windy. The SEC brought charges against them as well because Windy ran an unregistered exchange, broker and clearing agency without registration – thus violating securities laws.
Beaxy Ceases Operations Ahead Of SEC Lawsuit
Beaxy ceased operations one day prior to the SEC lawsuit being filed on Wednesday (March 29th 2023). Gurbinder Kumar – director of the division enforcement at the SEC – stated that “The law is clear: Companies wishing to operate as national securities exchanges must register with us or meet a valid exemption from registration…We are committed to holding accountable those who fail to comply with this requirement”.
Penalties Facing Beaxy Executives
As per their statements on Thursday (April 1st 2023), all defendants involved in this case face potential penalties including disgorgement plus interest; civil penalties; permanent injunctions enjoining them from participating in any digital asset security offerings or acting as a digital asset exchange unless registered under federal law; officer-and-director bars; cease-and-desist orders prohibiting future violations of federal securities laws; penny stock bars; suspension or revocation of their license(s); other equitable relief like rescission for investors who purchased BXY tokens during its ICO; pre-judgment interest; fees associated with filing false reports with regulators etc..