Crypto exchange Beaxy shuts down after SEC lawsuit

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US Securities and Exchange Commission (SEC) charged the Beaxy cryptocurrency platform with carrying out brokerage and clearing activities without proper registration.

The SEC also accused Beaxy of illegallyraising $8 million through the placement of unregistered securities. The founder of the platform, Artak Hamazaspyan, was also charged. The agency noted that Hamazaspyan “misappropriated at least $900,000 for personal use, including gambling.”

“When a crypto-intermediary combines all the functions- as Beaxy did - investors are exposed to serious risk. The blurred functionality and lack of registrations meant that rules designed to protect investors were not followed or even acknowledged by Beaxy,” the SEC said in a statement.

The exchange said on its website that it was suspending operations due to an "uncertain regulatory environment."

“We have made a commitment to cooperatewith the Securities and Exchange Commission for over two years, continually providing information and data to assist regulators in any way possible,” Beaxy said.

The SEC said that exchange clients will be able to begin withdrawing their assets within 24 hours. The agency also advises users to completely withdraw their assets within 30 days.

Former SEC Chairman Gary GenslerGensler called on the government to allocate $2.4 billion to the agency to more effectively prosecute unregistered crypto companies. The SEC also warned investors about the risks of investing in crypto assets and urged them not to trust evidence of reserves published by crypto exchanges.