Beaxy opens new crypto spot exchange after hacking attempt scuttles launch

Quick Take

  • Beaxy Digital LTD’s cryptocurrency exchange goes live today
  • The exchange suffered a SIM swap hack before its scheduled launch date last week, although no customer information or funds were compromised
  • With around 258 cryptocurrency exchanges in the market, it may be difficult for Beaxy to differentiate itself from its competitors

Crypto exchange Beaxy Digital LTD is opening up its doors after brushing off a hack two weeks ago.

The new exchange is offering crypto-to-crypto trading to start, including 26 trading pairs that cover 16 of the most popular coins, according to the company. The firm has 60,000 pre-registered users and has seen strong demand from the market, Beaxy CEO Artak Hamazaspyan told The Block.

Originally scheduled to go live on June 4, a sim swap hack on May 23 set the exchange's launch back. Hamazaspyan said that the hackers failed to steal any user information or funds from the exchange, although the attempt did prompt the firm to strengthen its security efforts. 

“The incident we experienced was a SIM attack on a team member involving a fake ID and social engineering,” said Hamazaspyan. "Our individual security practices have improved across the company as a result."

Still, the incident speaks to the nascent nature of the cryptocurrency market and one of the biggest issues facing markets. 2019 has witnessed a slew of hacks that count Binance, Cryptopia, and CoinBene as victims, while around $1.7 billion worth of cryptocurrencies were stolen last year. 

Wall Street-powered?

Describing itself as a “full-service cryptocurrency trading platform,” Beaxy is also working on building cryptocurrency futures products. Currently, the firm is preparing an application to the U.S. Commodity Futures Trading Commission (CFTC) for margin trading and futures licenses. However, given that the regulator is notoriously stringent about approving cryptocurrency derivatives platforms, Hamazaspyan admitted that it would be a long shot. 

“We can apply for it. But is it realistic to get it? Not very at this point,” said Hamazaspyan.

With hundreds of cryptocurrency exchanges on the market, Beaxy faces fierce competition. Hamazaspyan said the firm wants to differentiate itself by providing several unique features on the platform, including better customer support, faster transaction speed, and IRS-ready tax reporting.  

The firm is also hoping that its partnership with OneMarketData, a software provider to many financial institutions in the stock market, can boost users’ and regulators’ confidence in the exchange. Beaxy uses OneMarketData’s surveillance technology to scan for fraudulent activity. Hamazaspyan said OneMarketData clout with regulators will be valuable.

“We have this market standard surveillance tool [from OneMarketData] which is approved by the government,” said Hamazaspyan. “When we talked to government regulators they like it that we use tools from [OneMarketData] because they know each other. They have worked for decades together.”

Beaxy is not the first cryptocurrency exchange to leverage trading technology from Wall Street. Earlier this year, it was reported that Nasdaq offered its surveillance tools to several cryptocurrency exchanges. The stock exchange also counted cryptocurrency trading firm Bcause LLC as its client, whose mining subsidiary filed for bankruptcy protection in April.   

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