<p class="MsoNormal">Cryptocurrency exchange, Beaxy,
has shut down its operations after
over three years of
launching into the market. The exchange ceased its
operations in the wake of a lawsuit from the United States Securities and
Exchange (SEC) which charged the platform and its executives for operating an
unregistered exchange, brokerage and
clearing agency. </p><p class="MsoNormal">In a statement <a href="https://www.beaxy.com/blog/suspension-of-services-on-beaxy-exchange/" target="_blank" rel="follow">published</a> on its website on Tuesday, Beaxy said it was
immediately suspending its services on the trading platform “due to the uncertain
regulatory environment surrounding our business.” Beaxy <a href="https://www.financemagnates.com/cryptocurrency/news/beaxy-launches-crypto-trading-services-targets-186-countries/" target="_blank" rel="follow">launched its crypto trading services</a> in June 2019 with the plan to offer its services in 43 states in the United States and in 184 other countries.</p><p class="MsoNormal text-align-justify">SEC Charges Beaxy’s Founder,
Others</p><p class="MsoNormal">However, the SEC in a <a href="https://www.sec.gov/news/press-release/2023-64" target="_blank" rel="follow">press
statement</a> released on Wednesday said it charged Artak Hamazaspyan, the crypto exchange’s Founder, and
his company, Beaxy Digital Limited, for raising $8 million in an
unregistered offering of the Beaxy token (BXY). The securities regulator
further alleged that Hamazaspyan “misappropriated at least $900,000 for
personal use, including gambling.”</p><blockquote class="twitter-tweet"><p lang="en" dir="ltr">Today we charged the crypto asset trading platform <a href="https://t.co/ykFkM2s0wY">https://t.co/ykFkM2s0wY</a> and its executives for failing to register as a national securities exchange, broker, and clearing agency, and we charged market makers operating on the Beaxy Platform as unregistered dealers.</p>— U.S. Securities and Exchange Commission (@SECGov) <a href="https://twitter.com/SECGov/status/1641142070092898304?ref_src=twsrc%5Etfw">March 29, 2023</a></blockquote><p class="MsoNormal">In addition, the SEC charged two managers, Nicholas Murphy and Randolph Bay Abbott, for operating
Beaxy Exchange as an unregistered exchange, broker and clearing agency through
Windy Inc. According to the regulator, Murphy and Abbot took over the reins of
Beaxy Exchange in October 2019 after convincing Hamazaspyan to resign as a
result of the unregistered sale of BXY and the misappropriation of customer
funds. </p><p class="MsoNormal">Furthermore, the US securities
regulator in a complaint filed before a district court in
Illinois, accused Brian Peterson and his companies of acting as market
markers for Beaxy; hence, acting as unregistered dealers. The companies are
Braverock Investment, Future Digital Markets, Windy Financial and Future
Financial. </p><p class="MsoNormal">According to the SEC, Windy
signed an agreement with Peterson and his companies in December 2019 to provide
market marking services for BXY. In May 2020, one of the firms signed a
similar agreement for a different digital asset. </p><p class="MsoNormal text-align-justify">SEC Requires Separate
Registrations</p><p class="MsoNormal">Speaking on the case, Gurbir S.
Grewal, the Director of the SEC’s Division of Enforcement, noted separate
registration requirements exist for organizations that want to operate as
exchanges, brokers and clearing agencies. These requirements are targeted at protecting
investors and ensuring checks and balances among the various firms. </p><p class="MsoNormal">“When a crypto intermediary
combines all of these functions under one roof — as we allege that Beaxy
did — investors are at serious risk. The blurring of functions and the lack of
registrations meant that regulations designed to protect investors were not
followed or even recognized by Beaxy,” Grewal explained.</p><blockquote class="twitter-tweet"><p lang="en" dir="ltr">SEC is incrementally building a body of legal theories to target crypto asset intermediaries. It’s not only focused exchanges. Beaxy complaint shows SEC is scrutinizing market making arrangements as broker-dealer activity and certain custody arrangements as clearing activity.</p>— Mike Selig (@MikeSeligEsq) <a href="https://twitter.com/MikeSeligEsq/status/1641112792445992960?ref_src=twsrc%5Etfw">March 29, 2023</a></blockquote><p class="MsoNormal">In response to the lawsuit, the SEC
said Windy, Murphy, Abbot and Peterson have agreed to shut down the
cryptocurrency trading platform, refund all customers and destroy “any and all
BXY in Windy’s possession.”</p><p class="MsoNormal">The parties, without admitting
or denying the allegations, have also agreed to pay various amounts in
penalties to the SEC. This includes $79,200 in civil penalties to be paid by Windy, Abbot and
Murphy. Moreover, the SEC said it will continue its litigation against Hamazaspyan for securities
fraud, and both the Founder and Beaxy Digital for the unregistered offering
of BXY.</p><p class="MsoNormal text-align-justify">Beaxy Promises to Open Asset
Withdrawal</p><p class="MsoNormal">Meanwhile, in its announcement,
Beaxy said it will make all customer assets on its platform available for
withdrawal “within 24 hours after all user orders are cancelled and balances
verified.”</p><p class="MsoNormal">“Trading on the platform has
been halted effective immediately to simplify the withdrawal and reconciliation
process. We strongly advise you to withdraw any remaining assets within 30 days
to avoid unnecessary complications and delays,” Beaxy announced.</p><p class="MsoNormal">The SEC's action against Beaxy comes a week after the regulator <a href="https://www.financemagnates.com/cryptocurrency/sec-hits-tron-founder-justin-sun-8-american-celebrities-with-charges/" target="_blank" rel="follow">charged crypto entrepreneur Justin Sun</a> and three of his companies with engaging in wash trades with the Tronix (TRX) token. Additionally, the financial watchdog charged eight American celebrities for promoting TRX and/or BitTorrent tokens without disclosing that they were paid to do so.</p><p class="MsoNormal">In a separate development, the US derivatives regulator also recently <a href="https://www.financemagnates.com/cryptocurrency/cftc-sues-binance-for-illegal-derivatives-exchange-numerous-violations/" target="_blank" rel="follow">brought charges against Binance</a> for operating an illegal digital asset derivatives exchange. Moreover, the watchdog accused the world's largest cryptocurrency exchange of committing “numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations." However, Binance's CEO in its reaction described the lawsuit as <a href="https://www.financemagnates.com/cryptocurrency/binance-ceo-calls-cftc-lawsuit-an-incomplete-recitation-of-facts/" target="_blank" rel="follow">an "incomplete recitation of facts."</a></p><p class="MsoNormal">OpenFin Adds Dow Jones; Quantile Taps SwapAgent FX, <a href="https://www.financemagnates.com/forex/news-nuggets-29-march-openfin-adds-dow-jones-quantile-taps-swapagent-fx/" target="_blank" rel="follow">read today's news nuggets</a>.</p>
This article was written by Solomon Oladipupo at www.financemagnates.com.
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