Crypto Exchange Beaxy Shut Down After SEC Lawsuit
Crypto platform Beaxy has officially closed its doors as the U.S. Securities and Exchange Commission (SEC) charged the company and its founder Artak Hamazaspyan with operating an unregistered exchange and brokerage, the agency said in a Wednesday statement.
The SEC also accused Beaxy Digital Ltd. of illegally raising $8 million in the offering of an unregistered security with its BXY token. The agency additionally noted Hamazaspyan “misappropriated at least $900,000 for personal use, including gambling.”
Windy Inc. took over the platform in 2019 after the founder misappropriated money, according to the SEC, and managers Nicholas Murphy and Randolph Bay Abbott maintained Beaxy for trading crypto assets “that were offered and sold as securities,” the SEC said. So the agency is also accusing them of violating securities law by operating an unregistered exchange, broker and clearing agency, though the platform had been described as defunct in another SEC case last year.
“When a crypto intermediary combines all of these functions under one roof – as we allege that Beaxy did – investors are at serious risk,” said Gurbir S. Grewal, the SEC’s enforcement chief, in a statement. “The blurring of functions and the lack of registrations meant that regulations designed to protect investors were not followed or even recognized by Beaxy.”
The exchange posted on its website that it was suspending its operations because of the “uncertain regulatory environment surrounding our business.”
“We forthrightly committed to cooperation with the Securities and Exchange Commission (SEC) for over two years, continually providing information, data, and interviews to assist regulators in whatever manner we could,” read its statement.
The statement doesn’t mention that it closed under an agreement in federal court with Windy and the people associated with that company. The agreement included returning all assets to customers and “destroying” any BXY in Windy’s possession. The SEC is still pursuing Beaxy Digital and Hamazaspyan with litigation, the agency said.
Customers of the exchange are able to withdraw their assets within 24 hours after all user orders are canceled and balances are verified and are encouraged to do so within 30 days, the statement said.
UPDATE (March 29, 14:45 UTC): Adds details about the shutdown of the website.