- Executives Face Penalties While SEC Continues Litigation Against Beaxy Founder
- Key Players Allegedly Involved in Unregistered Trading, Offering, and Personal Misuse of Funds as SEC
SEC Charges Beaxy for Non-Compliance
The US Securities and Exchange Commission (SEC) has charged the Beaxy crypto trading platform for failing to register as a national securities exchange, broker, or clearing agency, according to a recent news release. The SEC alleges that Nicholas Murphy and Randolph Bay Abbott facilitated crypto securities trading on Beaxy through a company called Windy Inc.
Unregistered Beaxy Token Offering and Personal Misuse of Funds
The SEC claims that Beaxy founder Artak Hamazaspyan raised $8 million in an unregistered offering of the Beaxy token (BXY) and used at least $900,000 of the funds for personal expenses, including gambling. After Hamazaspyan’s resignation, Murphy and Abbott reportedly continued operating the platform.
Charges Against Beaxy Market Makers
Additionally, the SEC has charged market makers operating on Beaxy, including companies allegedly run by Beaxy Chair Brian Peterson, as unregistered dealers. Beaxy announced on its website that it has ceased operations due to the uncertain regulatory environment surrounding its business.
SEC’s Focus on Verticalization in Crypto Exchanges
Alexander Grieve, Vice President at Tiger Hill Partners, mentioned in a tweet that the SEC’s charges against Beaxy highlight the vertical integration of the exchange’s custody and clearing functions. Grieve pointed out that this is an area SEC Chair Gary Gensler has particularly criticized in crypto exchanges.
The Importance of Separating Exchange, Broker, and Clearing Functions
Gurbir Grewal, Director of the SEC’s Division of Enforcement, explained in a statement that separate registration requirements for exchanges, brokers, and clearing agencies are in place to protect investors. Grewal emphasized that when a crypto intermediary combines all these functions under one roof, as Beaxy allegedly did, investors are at serious risk.
Settlements and Ongoing Litigation
Abbott, Murphy, and Windy Inc. have agreed to pay a total of $79,200 in civil penalties, while Peterson and his companies have agreed to pay a combined $86,600. The SEC is continuing to litigate charges of securities fraud and the alleged unregistered offering of BXY against Beaxy founder Hamazaspyan.
https://www.beaxy.com/blog/suspension-of-services-on-beaxy-exchange/
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