The Securities and Exchange Commission (SEC) has brought charges against the cryptocurrency platform Beaxy as well as its executives, alleging that they failed to register as an exchange, broker, or clearing agency. This comes as the latest action taken by the financial watchdogs in their ongoing rampant crackdown on crypto firms operating in the United States.
SEC Charges Beaxy Crypto Exchange
The Chicago-based Beaxy Digital Ltd. was also charged by the SEC of fraudulently raising $8 million through its sale of unregistered security with its BXY token. In addition, the SEC also charged founder Artak Hamazaspyan for misappropriating funds worth $900,000 in personal use, including gambling.
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Along with Artak, two other executives Nicholas Murphy and Randolph Bay Abbott were also implicated in the lawsuit because of a company that they oversaw called Windy — which was responsible for maintaining Beaxy. According to the SEC’s allegations, Windy breached securities laws by transacting business through the Beaxy platform without first registering either as an exchange, a clearing agency, or a broker.
Beaxy Shuts Down Services
Following the lawsuit, the crypto exchange announced its decision to immediately halt operations via a post on its website, citing the “uncertain regulatory environment surrounding our business” as the reason for the abrupt move. As a direct consequence of this, the utility of the platform’s native token, BXY, has been lost, leaving investors in distress.
While speaking about the continuing crackdowns on several crypto firms including Beaxy, SEC chief Gary Gensler was quoted as saying:
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.
According to Beaxy’s official statement, customers of the exchange have the ability to withdraw their funds within 24 hours following the closure of all open orders and balances being verified. The accused individuals have not admitted or denied the allegations leveled against them by the agency.
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