Last week, the Securities and Exchange Commission (SEC) charged beaxy with operating as a national securities exchange minus the authorization to do so. The SEC filed charges against founder beaxy Artak Hamazaspyan, and his company Beaxy Digital, Ltd., for raising $8 million in an unregistered security offering of the Beaxy token (BXY). The SEC claims that Hamazaspyan pilfered some of the funds, around $900,000 for personal uses – such as gambling.
At the same time, the SEC filed charges against the market makers on beaxy, alleging they were operating as unregistered deals.
Today, the SEC has announced it is charging the market makers separately as unregistered dealers. The SEC claims that since October 2019, Nicholas Murphy and Randolph Bay Abbott, vis their company Windy Inc., maintained and provided Beaxy with facilitating the buying and selling of crypto that were allegedly securities.
The SEC’s complaint alleges that, after Murphy and Abbott convinced Hamazaspyan to resign following the unregistered offering of BXY and the allegations of misappropriated assets, the two continued the operation of the Beaxy Platform through Windy.
Windy apparently entered into an agreement with Peterson and his companies – Braverock Investments LLC, Future Digital Markets Inc., Windy Financial LLC, Future Financial LLC (or Braverock Entities) – to provide market making services for BXY, and in May 2020, one of these companies entered into a similar market making agreement for another crypto asset security. By doing so, the complaint alleges that Peterson and the Braverock Entities acted as unregistered dealers
Windy, Murphy, Abbott, Peterson, and the Braverock Entities have agreed to a settlement with the SEC without admitting and denying the charges.
Windy, Abbott, and Murphy agreed to pay a total of $79,200 in civil penalties; Peterson agreed to pay a civil penalty of $6,600; and the Braverock Entities agreed to jointly and severally pay a penalty of $80,000.
In addition, Windy agreed to pay $10,779 in disgorgement plus prejudgment interest, and the Braverock Entities agreed to jointly and severally pay $52,000 in disgorgement plus prejudgment interest. The penalty amounts reflect the cooperation the staff received from the settling parties during the investigation.
The SEC is litigating its charges against Hamazaspyan for securities fraud
Following the announcement of the SEC enforcement action against beaxy, the digital asset trading platform issues a statement explaining that “Unfortunately, despite our best efforts, it has become clear that the regulatory environment is just too uncertain to continue operations.”