The war on crypto intensifies: SEC charges another company

by Arthur · March 29, 2023

The Securities and Exchange Commission’s (SEC) crackdown on the crypto industry shows no signs of abating. The regulator continues to target companies and large players in the sector. In the latest move, the SEC has archived charges against Beaxy, a cryptocurrency platform, and its executives.

The SEC alleged that Beaxy failed to register as a national securities exchange, broker and clearing agency, resulting in a violation of securities laws.

Crypto platform Beaxy charged by the SEC

The founder of Beaxy, Artak Hamazaspyan, and his company, Beaxy Digital Ltd., are accused by the SEC of conducting an unregistered offering of the beaxy token (BXY) and misappropriating $900,000 for personal use, according to the SEC, including gambling.

Furthermore, the SEC has charged market makers operating on the Beaxy platform as “unregistered dealers. The charges suggest that the market participants failed to comply with registration requirements, which are put in place to protect investors and ensure market integrity.

In addition, the SEC’s complaint targets Nicholas Murphy and Randolph Bay Abbott, who managed Windy Inc. The complaint alleges that Windy provided the Beaxy platform. This online trading platform facilitated the buying and selling of crypto assets that were offered and allegedly sold as securities since October 2019.

The SEC’s complaint also alleged that Windy, through the Beaxy platform, violated the Securities Exchange Act, which regulates securities trading and other aspects of the securities markets in the United States.

The complaint further alleges that Murphy and Abbott convinced Hamazaspyan to withdraw from the Beaxy platform following the unregistered offering of BXY and misappropriation of investors’ assets. However, the complaint suggests that Murphy and Abbott continued to operate the Beaxy platform through wind, which they managed.

As a result, the SEC alleges that Murphy and Abbott are also responsible for operating an unregistered exchange, broker and clearing agency.

The SEC isn’t slowing down

The SEC alleges that in December 2019, Windy agreed with Brian Peterson and his companies, collectively known as Braverock Entities, to provide market-making services for the Beaxy token, which was offered and sold as a security, according to the regulator.

The complaint further states that one of these companies entered into a similar marketing agreement for another crypto-asset in May 2020. According to the SEC, by providing market-making services and acting as intermediaries in the purchase and sale of securities without registering, Peterson and Braverock Entities acted as unregistered dealers.

According to the SEC, without admitting or denying the allegations, Windy, Murphy, Abbott, Peterson and the Braverock entities have agreed to permanent injunctions prohibiting them from future violations of securities laws and from paying civil penalties. Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, asserted:

When a crypto middleman combines all these functions under one roof – as we allege Beaxy did – investors are at serious risk. The blurring of features and the lack of registrations meant that regulations designed to protect investors were not followed or even recognized by Beaxy.