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SEC Hits Beaxy This Time: Lawsuit Filed

sec hits beaxy this time lawsuit filed

On Wednesday, the United States Securities and Exchange Commission (SEC) announced in an official statement that it had charged crypto trading platform Beaxy and its founder Artak Hamazaspyan with operating an unregistered exchange and brokerage. As a result of this action, Beaxy has been forced to close down operations permanently. According to the SEC, Beaxy Digital Ltd. unlawfully generated $8 million by issuing unregistered security through its BXY token. Moreover, it was also reported that Hamazaspyan had misused at least $900,000 of this sum for personal benefit – including gambling activities.

According to the SEC, Beaxy Didn’t Follow Regulations to Protect Investors

The SEC has accused Nicholas Murphy and Randolph Bay Abbott, managers at Beaxy Exchange, of violating securities law by running an unregistered exchange, broker, and clearing agency. The agency claims that Beaxy was used for trading crypto assets that were offered and sold as securities and that the platform continued to operate despite being described as defunct in another SEC case in the previous year. According to the SEC, Windy Inc. acquired the platform in 2019 after its founder allegedly misappropriated funds.

Gurbir Grewal, the head of enforcement at the SEC, stated that when a cryptocurrency intermediary integrates all of these functions in one place like Beaxy allegedly did, it puts investors in significant danger. Grewal added that the mixing of functions and the absence of registration means that the regulations that were designed to safeguard investors were not adhered to or even recognized by Beaxy.

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Beaxy Announces It Has Stopped All Operations

Beaxy, in a post on its website, announced that it was halting its operations due to the uncertain regulatory climate surrounding its business. The exchange further stated that it had been cooperating with the Securities and Exchange Commission for more than two years by providing information, data, and interviews to assist regulators in whatever way possible.

The SEC’s statement does not acknowledge that Beaxy had closed its operations under a federal court agreement with Windy and its associates, which required the return of assets to customers and the destruction of BXY in Windy’s possession. Despite this agreement, the SEC is pursuing litigation against Beaxy Digital and Hamazaspyan. The SEC has stated that customers of the exchange will be allowed to withdraw their assets within 24 hours of the cancellation of all user orders and the verification of balances. Customers are encouraged to withdraw their assets within 30 days.


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