Crypto Exchange Beaxy Shut Down After SEC Lawsuit

The Securities and Exchange Commission also accused the exchange's founder of misappropriating customer money.

AccessTimeIconMar 29, 2023 at 2:30 p.m. UTC
Updated Mar 29, 2023 at 3:12 p.m. UTC

Crypto trading platform Beaxy has officially closed its doors as the U.S. Securities and Exchange Commission charged the company and its founder, Artak Hamazaspyan. with operating an unregistered exchange and brokerage, the agency said Wednesday in a statement.

The SEC also accused Beaxy Digital Ltd. of illegally raising $8 million in the offering of an unregistered security with its BXY token. The agency additionally noted Hamazaspyan “misappropriated at least $900,000 for personal use, including gambling.”

Windy Inc. took over the platform in 2019 after the founder misappropriated money, according to the SEC, and managers Nicholas Murphy and Randolph Bay Abbott maintained Beaxy for trading crypto assets “that were offered and sold as securities,” the SEC said. So the agency is also accusing them of violating securities law by operating an unregistered exchange, broker and clearing agency, though the platform was described as defunct in another SEC case last year.

“When a crypto intermediary combines all of these functions under one roof – as we allege that Beaxy did – investors are at serious risk,” Gurbir Grewal, the SEC’s enforcement chief, said in the statement. “The blurring of functions and the lack of registrations meant that regulations designed to protect investors were not followed or even recognized by Beaxy.”

The exchange posted on its website that it was suspending its operations because of the “uncertain regulatory environment surrounding our business.”

“We forthrightly committed to cooperation with the Securities and Exchange Commission for over two years, continually providing information, data and interviews to assist regulators in whatever manner we could,” Beaxy said.

The SEC's statement doesn’t mention that Beaxy closed under an agreement in federal court with Windy and the people associated with that company. The agreement included returning all assets to customers and “destroying” any BXY in Windy’s possession. The SEC is still pursuing Beaxy Digital and Hamazaspyan with litigation, the agency said.

Customers of the exchange will be able to withdraw their assets within 24 hours after all user orders are canceled and balances are verified and are encouraged to do so within 30 days, the SEC said.

UPDATE (March 29, 14:45 UTC): Adds details about the shutdown of the website.

Edited by Stephen Alpher.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.

Helene Braun

Helene is a New York-based reporter covering Wall Street, the rise of the spot bitcoin ETFs and crypto exchanges. She is also the co-host of CoinDesk's Markets Daily show. Helene is a graduate of New York University's business and economic reporting program and has appeared on CBS News, YahooFinance and Nasdaq TradeTalks. She holds BTC and ETH.