SEC brings charges against Beaxy for not registering as securities exchange

Quick Take

The SEC brought charges against crypto platform Beaxy on Wednesday for allegedly not registering as an exchange, broker or a clearing agency.
SEC enforcement director Gurbir Grewal said Beaxy put investors at a “serious risk.”

The Securities and Exchange Commission charged cryptocurrency platform Beaxy and its executives for allegedly failing to register as an exchange, broker and clearing agency — the latest crypto-related move by the U.S. securities regulator.

The SEC also charged founder Artak Hamazaspyan, and a company he controlled, Beaxy Digital Ltd, with raising $8 million in an unregistered offering of the Beaxy token. The SEC also said he used $900,000 for personal use, including gambling.

Executives Nicholas Murphy and Randolph Bay Abbott were also caught up in charges via a company they managed called Windy, which maintained Beaxy. Windy, through the Beaxy Platform, violated securities laws because it didn’t register as an exchange, a clearing agency or a broker, the SEC alleges.

“To protect investors, there are separate registration requirements for exchanges, brokers, and clearing agencies, with each essentially acting as a check on the other,” said Gurbir Grewal, director of the SEC’s Division of Enforcement in a statement on Wednesday. “When a crypto intermediary combines all of these functions under one roof—as we allege that Beaxy did—investors are at serious risk."

Others swept in

In 2019, Windy entered into an agreement with Brian Peterson and his companies, together named Braverock Entities, to provide “market making services for BXY,” and later one of the companies “entered into a similar market making agreement for another crypto asset security.” That made Peterson and Bravework unregistered securities dealers, the SEC said.

Windy, Murphy, Abbott and Peterson agreed to cease all activities as an unregistered exchange, clearing agency, broker and dealer, as well as shut down the Beaxy platform, destroying BXY in Windy’s possession.

As part of the agreement, the four individuals and the Braverock Entities did not admit or deny the agency’s allegations.

The SEC said it is “litigating its charges against Hamazaspyan for securities fraud and against Hamazaspyan and Beaxy Digital for the unregistered offering of BXY.”