Crypto platform Beaxy closes after SEC charges

The U.S. Securities and Exchange Commission (SEC) has charged crypto platform Beaxy and its founder, Artak Hamazaspyan, with operating an unregistered exchange and brokerage. According to a Wednesday statement from the SEC, Beaxy Digital Ltd. raised $8 million through the offering of its BXY token in violation of federal securities law. Additionally, the agency noted that Hamazaspyan had misappropriated over $900,000 of these funds for personal use, including gambling. As a result of these charges, Beaxy has officially closed its door.

In 2019, Windy Inc. took over Beaxy after its founder misappropriated money and Nicholas Murphy and Randolph Bay Abbott were accused by the SEC of violating securities law by operating an unregistered exchange, broker, and clearing agency. According to Gurbir S. Grewal, the SEC’s Enforcement Chief, “When a crypto intermediary combines all of these functions under one roof, as Beaxy did, investors are put at serious risk.”

He added, “The blurring of functions and the lack of registration meant that regulations designed to protect investors were not followed or even recognized by Beaxy.” As a result, the exchange suspended its operations due to the “uncertain regulatory environment surrounding our business.”

Beaxy Digital released a statement that they had cooperated with the Securities and Exchange Commission (SEC) for over two years, providing information, data, and interviews to assist regulators. However, the statement did not mention that the exchange closed under an agreement in federal court with Windy and associated persons, which included returning all assets to customers and destroying any BXY held by the latter. Also, the SEC is still pursuing Beaxy Digital and Hamazaspyan with litigation. Customers of the exchange can withdraw their assets within 24 hours after all user orders are canceled and balances are verified, and they are encouraged to do so within 30 days, according to the statement.