Crypto exchange Beaxy was forced to suspend its operations on Wednesday due to the uncertain regulatory atmosphere caused by the US Securities and Exchange Commission (SEC). The SEC accused Beaxy founder Artak Hamazaspyan of securities fraud, alleging that he had raised $8 million through an unregistered offering of the token BXY and then misappropriated at least $900,000 of those funds for gambling and other personal expenses. Beaxy and its executives were also charged with operating as an exchange, broker, and clearing agency without registering with the SEC.
Gurbir S. Grewal, the Director of the SEC’s Division of Enforcement, has stated that investors are at serious risk when a crypto intermediary combines all of these functions without registering with the SEC. Hamazaspyan has yet to comment on the situation and has since deleted his LinkedIn account. The SEC civil charges could be followed by criminal charges from federal law enforcement agencies.
The SEC’s charges are part of a larger trend of increased regulatory scrutiny of the crypto industry. Just this week, the Commodity Futures Trading Commission (CFTC) sued Binance, the world’s largest crypto exchange, for operating an “illegal” exchange and a “sham” compliance program. The news caused investors to withdraw $1.6 billion in crypto from Binance, as of Wednesday. Additionally, prosecutors in New York charged disgraced CEO and founder of defunct crypto exchange FTX, Sam Bankman Fried, with foreign bribery.
SEC Chair Gary Gensler has stated that the Beaxy charges serve as a reminder to crypto intermediaries that they must comply with the law and not the other way around. He added that securities laws should protect investors, make capital formation easier and cheaper, and improve our markets.
