Beaxy Founder Faces Charges of Gambling with Investor Funds

Hamazaspyan, who founded Beaxy, is also accused of having gambled with investor funds. The exchange wound down operations last week, citing an “uncertain regulatory environment” as the reason why.

Misappropriated Funds and Unlicensed Operations

The SEC argues that Hamazaspyan has raised $8 million from BXY, the cryptocurrency exchange’s native token, and used at least $900,000 of the funds for various personal uses, amongst which is gambling.

Other personal expenses were also covered by the nearly $1 million of missing funds, the SEC says. Gurbir S. Grewal, head of SEC’s Division of Enforcement argued that Beaxy exposed investors to serious risks because the company had decided to combine the functions of an exchange, a broker, and a clearing agency.

None of these operations was properly registered with the SEC, S. Grewal insists. The official stated:

The blurring of functions and the lack of registrations meant that regulations designed to protect investors were not followed or even recognized by Beaxy.

Gurbir S. Grewal, head of SEC’s Division of Enforcement

For the time being, Beaxy is facing civil charges, but this could later on lead to criminal charges as well – the more serious type. Beaxy and Hamazaspyan have not commented on the current situation.

Cryptocurrency Sector Targeted by US Regulators

In the meantime, the crackdown on the crypto sector continues in full swing. Companies are being targeted as they are allegedly breaking laws in the United States.

Many industry people and companies have grumbled privately and publicly that it’s hard to navigate the US regulatory framework as it’s pretty much non-existent and short of pulling the plug on crypto companies, there are not many other options to fully comply.

The latest entity to fall under regulatory blows in the US is Binance, which was charged by the Commodity Futures Trading Commission and is sued as part of a billion-worth lawsuit. The lawsuit is brought against both Binance and its founder, Changpeng “CZ” Zhao.

A separate lawsuit has been filed against the company by plaintiffs who alleged that CZ and a number of influencers have advertised and misled consumers. The lawsuit is filed by the Moscowitz Law Firm and Boies Schiller Flexner on behalf of the plaintiffs. The same law firm is also suing FTX and its influencers for allegedly misleading consumers.