Crypto exchange Beaxy shuts operations as SEC files charges: More inside

On Mar 30, 2023

Crypto exchange Beaxy has suspended operations following a lawsuit from the U.S. SEC.
The SEC charged the firm and its founder with offering unregistered securities.

Chicago-based crypto exchange Beaxy has suspended its operations with immediate effect. The announcement came after the United States Securities and Exchange Commission (SEC) filed multiple charges against the trading platform and its founder, Artak Hamazaspyan.

Beaxy Digital charged with sale of unregistered security

According to a press release from the SEC, Beaxy Exchange and its executives have been charged for their failure to register as a national securities exchange, broker, and clearing agency. The SEC charged the firm’s founder, Artak Hamazaspyan, and Beaxy Digital with raising $8 million through the sale of the BXY token. The securities regulator has alleged that the token is an unregistered security.

The financial watchdog further alleged that Artak Hamazaspyan misappropriated at least $900,000 for his personal use, which reportedly included gambling. The SEC has also charged Beaxy’s market makers for operating as unregistered dealers. The regulator’s complaint stated that the exchange had violated the Securities Exchange Act of 1934.

SEC Chair Gary Gensler said in a statement that the lawsuit against Beaxy will:

“Serve as a reminder to crypto intermediaries that their business models must comply and adapt to the law, not the other way around.”

Beaxy put out a statement following the lawsuit, informing its customers about the suspension of its services, citing an uncertain regulatory environment.

The statement read:

“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. Unfortunately, despite our best efforts, it has become clear that the regulatory environment is just too uncertain to continue operations.”

The exchange clarified that all customer assets on the platform were secure. Additionally, clients can withdraw their funds once the firm cancels user orders and verifies balances. However, they should do so within 30 days.

This article originally appeared here.