Mar 29, 2023 - Economy

The SEC charges crypto platform Beaxy, founder

Photo by Kevin Dietsch/Getty Images

A top U.S. financial regulator continues to hammer into the crypto industry.

Why it matters: The top-line complaint leveled by the Securities and Exchange Commission against Beaxy alleges the platform failed to register as a national securities exchange, and also takes issue with how it operated.

Driving the news: The SEC Wednesday charged Beaxy.com, its executives including founder and former chief Artak Hamazaspyan.

The big picture: The SEC enforcement actions appear to be reaching fever pitch, with major exchanges such as Coinbase and Kraken as well as smaller, but well-known crypto leaders like Tron's Justin Sun in their crosshairs.

What they're saying: “We allege that Beaxy and its affiliates performed the functions of an exchange, broker, clearing agency, and dealer without registering with the Commission and complying with clear, time-tested rules governing those activities,” said SEC Chair Gary Gensler in a press statement.

Details: The SEC also alleges that Beaxy illegally raised $8 million in an unregistered offering of its native Beaxy token (BXY).

  • And it also accuses Hamazaspyan of misappropriating some $900,000 of those funds for personal use, including gambling.

What we're watching: Windy will cease operations, Beaxy has been shuttered and customer assets are supposed to be accounted for and transferred back to them.

  • Also, Windy will destroy all BXY in possession.

Zoom in: The complaint also alleges that Nicholas Murphy and Randolph "Bay" Abbott ran the Beaxy platform through a company called Windy Inc. Windy also entered into an agreement with Brian Peterson and his firms for market-making services.

  • For all of the activities they were conducting, the SEC alleges that Windy should have registered as an exchange, but also as a clearing agency, as well as a broker.

The bottom line: Windy, Murphy, Abbott, Peterson and his associated firms, settled without admitting or denying the allegations of the complaint.

  • They agreed to pay fines.

The intrigue: The SEC says it is "litigating" charges against Hamazaspyan and Beaxy.

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