FameEX Hot Topics | Cryptocurrency Exchange Beaxy and Founder Face SEC Lawsuit for Alleged Violations

The US Securities and Exchange Commission (SEC) has filed a complaint against Beaxy Digital, a cryptocurrency exchange, for alleged violations of securities laws. The complaint, filed in a federal court in Chicago, accuses Beaxy and its founder, Artak Hamazaspyan, of engaging in securities fraud and unregistered digital asset offerings. According to the SEC, Beaxy raised $8 million by offering its own cryptocurrency token, BXY, to investors. However, Hamazaspyan allegedly misused $900,000 of the funds raised for personal uses, including gambling. In a statement released on Wednesday, the SEC claimed that Hamazaspyan violated securities laws by not registering the token offering and engaging in fraudulent activity.

The SEC's enforcement action against Beaxy comes as the agency has been stepping up its efforts to regulate the cryptocurrency industry. Earlier this month, the SEC notified Coinbase Global Inc. of its intent to sue over unregistered digital asset offerings and other issues. Besides Beaxy and Hamazaspyan, the SEC is also suing a group of companies operated by Brian Peterson, including Braverock Investments LLC, for allegedly acting as unregistered dealers. The agency has reached a settlement with Nicholas Murphy and Randolph Bay Abbott, the individuals currently managing Beaxy, who took over the platform from Hamazaspyan and operated it without registering it through their company, Windy Inc.

As part of the settlement, Windy, Abbott, and Murphy agreed to pay $79,200 in civil penalties, while Peterson and his companies agreed to pay $86,000 in fines. Beaxy also agreed to shut down its website. Gurbir Grewal, the SEC's enforcement director, stated that when a cryptocurrency intermediary like Beaxy combines multiple functions under one roof, 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. In response to the settlement, attorneys representing Windy, Abbott, Murphy, Peterson, and Braverock stated that their clients are pleased to have put the matter behind them and are looking forward to the continuing development of cryptocurrency and blockchain technology. Hamazaspyan did not immediately respond to a request for comment.

The SEC is litigating the securities fraud charges against Hamazaspyan and against him and Beaxy Digital for the unregistered offering of the BXY token. With the increasing scrutiny on the cryptocurrency industry by regulatory bodies, it is likely that we will see more enforcement actions against companies that violate securities laws in the future.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.