Cryptocurrency exchange closed
The U.S. Securities and Exchange Commission (SEC) announced on the 29th that it has sued cryptocurrency exchange Beaxy and its executives.
The reason for the complaint was that it had operated without being registered as an institution that provides trading services, brokerage, and clearing of securities. Some parties have neither confirmed nor denied the SEC’s allegations, agreeing to pay fines, etc., and Beaxy has already announced that it will shut down the exchange.
The SEC also said it had raised about ¥1 billion ($8 million) in Beaxy tokens (BXY), an unregistered security, to Beaxy founder Artak Hamazaspyan and the company he controlled. “Beaxy Digital” also sued. It also alleges that Hamazaspyan embezzled at least approximately ¥110 million ($900,000) for gambling and other personal uses.
Since October 2019, Beaxy is operated by Windy, a company run by Nicholas Murphy and Randolph Bay Abbott. As a web-based trading platform, it was said to have provided trading services for “multiple virtual currencies classified as securities.”
The SEC has also accused Windy of violating securities laws. Murphy and Abbott continued to run Beaxy through Windy after prompting Hamazaspyan to resign for offering unregistered securities and embezzling client assets.
In addition, the SEC complaint alleges that the persons and companies that entered into agreements with Windy to make the market for Beaxy tokens also violated securities laws.

What is market making
To provide liquidity by continuously buying and selling assets so that the market can be traded smoothly at all times. Market-making companies are also called “pricing agents” in Japanese.
Cryptocurrency Glossary

Gurbir S. Grewal, Director of the SEC’s Enforcement Division, said trading, brokerage and clearing businesses must register their businesses separately because they need to check each other for investor protection. After explaining, I commented as follows.

Like Beaxy, when a cryptocurrency brokerage company has all three businesses in one place, it exposes investors to significant risks.
The vague distinction between businesses and the lack of business registration meant that Beaxy did not follow investor protection regulations or even be aware of the rules.

Hamazaspyan and Beaxy Digital, who are not listed as having agreed to pay fines, will continue to be sued by the SEC.
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Beaxy statement
Beaxy announced that it will end its service on the 28th, the day before the SEC’s announcement. The reason for the termination of the service was said to be “unclear regulations on the business.”
Beaxy said it has been working with the SEC for more than two years, providing information and data and answering questions. He said he had tried his best, but decided that the regulatory environment was too unclear to continue the business.
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