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Cryptocurrency firm Beaxy has suspended operations amid criminal charges by U.S. regulators.
The Securities and Exchange Commission (SEC) accused Beaxy and several of its executives Wednesday (March 29, 2023) of operating as an unregistered broker, exchange and clearing agency. It’s part of an ongoing crackdown by the SEC on the crypto sector.
“To protect investors, there are separate registration requirements for exchanges, brokers, and clearing agencies, with each essentially acting as a check on the other,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a news release. “When a crypto intermediary combines all of these functions under one roof — as we allege that Beaxy did — investors are at serious risk. The blurring of functions and the lack of registrations meant that regulations designed to protect investors were not followed or even recognized by Beaxy.”
“We forthrightly committed to cooperation with the Securities and Exchange Commission (SEC) for over two years, continually providing information, data and interviews to assist regulators in whatever manner we could,” the company said in the post. “Unfortunately, despite our best efforts, it has become clear that the regulatory environment is just too uncertain to continue operations.”
In addition to the charges against the company, the SEC also accused founder Artak Hamazaspyan and a company he controlled called Beaxy Digital of raising $8 million in an unregistered offering of the token BXY and misappropriating at least $900,000 for gambling and other personal use.
These charges are part of a broader crackdown by regulators on the digital asset space. For example, Monday (March 27, 2023) saw the Commodity Futures Trading Commission (CFTC) file suit against crypto giant Binance, accusing it of violating the commission’s rules.
Federal prosecutors added (in March 2023) to the already-serious list of charges against FTX founder Sam Bankman-Fried, indicting him for allegedly bribinga Chinese government official.
Coinbase CEO Brian Armstrongannounced on Twitter that his company had received a Wells notice from the SEC tied to Coinbase’s listing of potential unregistered securities across its suite of products and services.
“Based on discussions with the Staff, the Company believes these potential enforcement actions would relate to aspects of the Company’s spot market, staking service Coinbase Earn, Coinbase Prime and Coinbase Wallet,” Coinbase said in a statement.
Wells notices are not formal charges or lawsuits, but often lead to them.
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