Beaxy Founder Accused with Gambling Investor Funds

“An unclear regulatory environment” forced crypto exchange Beaxy to close Wednesday. The SEC charged founder Artak Hamazaspyan with securities fraud.

He is accused of raising $8 million in an unregistered BXY token offering and misappropriating $900,000. The SEC filing states he spent this money on gambling and other personal expenses.

Beaxy and many executives were charged with operating an exchange, broker, and clearing agency without SEC registration.

“When a crypto intermediary combines all of these functions under one roof – as we allege that Beaxy did – investors are at serious risk,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement in a 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.”

Hamazaspyan cancelled his LinkedIn account after not responding to requests for comment.

SEC civil charges do not prohibit federal criminal charges. They often precede crime.

Cryptocurrency crackdown

A Chicago federal court filed those accusations amid a crypto industry crackdown. The Commodities Futures Trading Commission (CFTC) sued Binance, the largest crypto exchange, on Monday for running a "illegal" exchange and a "sham" compliance programme.

According to Nansen, Binance investors withdrew $1.6 billion in crypto on Wednesday.

New York prosecutors charged disgraced FTX CEO and founder Sam Bankman-Fried with foreign bribery over a $40m payment to Chinese authorities the following day. To release $1 billion in crypto frozen by Beijing.

Bankman-Fried now faces wire fraud, commodities fraud, securities fraud, and money laundering.

SEC Chair Gary Gensler routinely criticises bitcoin startups. As with Beaxy and others in the business, he accused them of combining financial services that should be handled by different companies.

“Our securities laws for decades have served to protect investors, make capital formation easier and cheaper, and improve our markets,” Gensler said, in relation to the Beaxy charges.

“This case serves as yet another reminder to crypto intermediaries that their business models must comply and adapt to the law, not the other way around,” he added.

By fLEXI tEAM