Beaxy and its Officials Charged by SEC for Running an Unregistered Exchange, Broker, and Clearing Agency

Securities and Exchange Commission, Beaxy, Braverock Investments LLC, Windy Financial LLC
Securities and Exchange Commission, Beaxy, Braverock Investments LLC, Windy Financial LLC information

March 29, 2023, Washington DC

An overview of Beaxy charges

The SEC charged (the Beaxy Platform) and its leaders with securities fraud today because they ran an unregistered national securities exchange, broker, and clearing agency. The SEC also charged the platform’s founder, Artak Hamazaspyan, and a company he ran, Beaxy Digital, Ltd., with raising $8 million through an unregistered sale of the Beaxy token (BXY) and taking at least $900,000 for himself. At long last, the SEC has filed charges against Beaxy Platform market makers, accusing them of being unlicensed dealers.

The Securities and Exchange Commission has filed a complaint against Nicholas Murphy and Randolph Bay Abbott, saying that since October 2019, they have run the company Windy Inc., which runs the Beaxy Platform, a web-based trading platform that makes it easy to buy and sell crypto assets that are offered and sold as securities. The lawsuit states that Windy has broken the Securities Exchange Act of 1934 by using the Beaxy Platform in the following ways:

should have been registered as an exchange because it functioned as a clearinghouse for securities orders from numerous buyers and sellers, utilizing established, non-discretionary processes under which such orders interacted, should have been registered as a clearing agency because of its role as an intermediary in the settlement of sell and purchase orders and the custody of customer assets; They should have registered as a broker since they were engaged in the business of effecting transactions in crypto assets that were offered and sold as securities on a regular basis for the accounts of others.

According to the Securities and Exchange Commission’s complaint, Murphy and Abbott also ran an unregistered exchange, broker, and clearing agency because they kept running the Beaxy Platform through Windy after getting Hamazaspyan to quit after the unregistered sale of BXY and the theft of investor assets.

The complaint also states that in December 2019, Windy entered into an agreement with Brian Peterson’s companies (Braverock Investments LLC, Future Digital Markets Inc., Windy Financial LLC, and Future Financial LLC (collectively, the Braverock Entities)) to provide market-making services for BXY and that in May 2020, one of these companies entered into a similar market-making agreement for another crypto asset security. In doing so, Peterson and the Braverock Entities, according to the lawsuit, operated as unlicensed sellers.

SEC Chairman Gary Gensler stated, “We allege that Beaxy and its affiliates acted as an exchange, broker, clearing agency, and the dealer without being registered with the Commission and without complying with the Commission’s registration requirements.” following clear, time-tested laws.”Our economy and the stock market have both been helped by our securities laws for many years. This decision should serve as a reminder to cryptocurrency exchanges that they need to make sure their business plans follow the law.

Gurbir S. Grewal, who is in charge of the SEC’s Enforcement Division, says, “To protect investors, there are different registration requirements for exchanges, brokers, and clearing agencies. Each one basically checks the other two.”We allege that Beaxy, a cryptocurrency exchange, put its customers at risk by performing multiple services in-house. Due to overlapping responsibilities and a lack of registrations, Beaxy was in violation of laws meant to safeguard investors.

Windy, Murphy, Abbott, and Peterson have agreed to perform certain undertakings pursuant to the consents filed in the U.S. District Court for the Northern District of Illinois today, including ceasing all activities as an unregistered exchange, clearing agency, broker, and dealer; shutting down the Beaxy Platform; accounting for customers’ assets and funds; transferring all customer assets and funds to each respective customer; and destroying customer records.

Windy, Murphy, Abbott, Peterson, and the Braverock Entities all agreed to permanent injunctions that stop them from breaking securities laws in the future and paying civil fines. They did this without admitting or denying the charges made against them. As part of a settlement, Windy, Abbott, and Murphy agreed to pay a total of $79,200 in civil penalties; Peterson paid $6,600; and the Braverock Entities paid $80,000 as a joint and several liabilities.

Windy also agreed to pay $10,779 in disgorgement and prejudgment interest, and the Braverock Entities agreed to pay $52,000 in disgorgement and prejudgment interest, both together and separately. The settlement amounts are reflective of the parties’ willingness to cooperate with the investigation.
Hamazaspyan and Beaxy Digital are being sued by the SEC for securities fraud and an unregistered issue of BXY, respectively.

Arsen Ablaev, Christine Bautista Jeon, and Craig McShane of the SEC’s Crypto Assets and Cyber Section performed the investigation under the direction of Amy Flaherty Hartman, Jorge G. Tenreiro, and David Hirsch. Alyssa Qualls will be in charge of litigation at the SEC.

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