(Reporting by Jonathan Stempel and Chris Prentice; editing by Jonathan Oatis, Josie Kao and Cynthia Osterman)
(Updates with comment)
By Chris Prentice and Jonathan Stempel
NEW YORK, March 29 (Reuters) - The U.S. Securities and
Exchange Commission (SEC) charged crypto firm Beaxy.com and
several executives for registration failures on Wednesday,
expanding regulators' push to rein in the industry.
The SEC accused a Chicago-based firm behind Beaxy and some
affiliates of serving in various roles such as an exchange,
broker and clearing agency without registering with the SEC.
That structure, which is common throughout the crypto industry,
is one that the SEC's chair has criticized for conflicts of
interest and risks to investors.
Wednesday's civil charges came one day after Beaxy said it
would immediately suspend services, saying that "due to the
uncertain regulatory environment surrounding our business, we
have made the difficult decision to cease operations."
It also charged founder Artak Hamazaspyan with raising $8
million in an unregistered offering of the token BXY and
misappropriating at least $900,000 for gambling and other
personal use.
Hamazaspyan did not respond immediately to a request for
comment through LinkedIn.
"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," SEC Chair Gary Gensler
said in a statement.
The charges filed in Chicago federal court expand a
crackdown by U.S. prosecutors and regulators on alleged abuses
in the digital asset industry.
On Monday, the Commodity Futures Trading Commission sued
Binance, accusing the world's largest crypto exchange of
violating rules preventing illegal activity.
The next day, prosecutors in New York added a Chinese
bribery charge to their fraud case against Sam Bankman-Fried,
who founded the now-bankrupt crypto exchange FTX.
Coinbase Global Inc is also in the SEC's sights,
saying on March 22 the regulator had found potential securities
law violations and might sue.
Wednesday's SEC action included charges against Windy Inc
and its principals Nicholas Murphy and Randolph Bay Abbott for
operating through Beaxy's platform without being registered.
Another man, Brian Peterson, was accused of acting as an
unregistered dealer by providing marketing services to Beaxy.
Windy, Murphy, Abbott and Peterson settled without admitting
wrongdoing and agreed to fines.
"Given this filing, and the fact that the SEC has
reportedly issued a Wells notice to Coinbase, it is likely that
this is a harbinger of additional actions with respect to
exchanges and similar entities," said Howard Fischer, a former
SEC lawyer and a partner at law firm Moses & Singer.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.