SEC case against Beaxy targeted crypto’s combined exchange model

The U.S. Securities and Exchange Commission filed a civil complaint on March 29, 2023 alleging that crypto trading platform Beaxy and associated executives and companies operated without registrations required for a national securities exchange, broker and clearing agency.

The case mattered beyond the size of Beaxy itself. The SEC was challenging a structure common among crypto intermediaries: placing order matching, customer transactions, asset custody and settlement inside one platform rather than separating functions among independently regulated entities. The regulator’s position was an allegation presented to a federal court, not a final judicial determination.

Filed in the U.S. District Court for the Northern District of Illinois as *SEC v. Beaxy Digital, Ltd., et al.*, case number 1:23-cv-01962, the 31-page complaint also brought claims concerning the BXY token offering, alleged misuse of offering proceeds and market-making activity.

One platform, several regulated roles

According to the complaint, Nicholas Murphy and Randolph Bay Abbott managed Windy Inc., which maintained Beaxy beginning in October 2019. The SEC alleged that the platform brought together orders for crypto assets offered and sold as securities through established, non-discretionary methods. On that theory, Windy should have registered as an exchange.

The agency separately alleged that Windy acted as an intermediary for payments and deliveries after orders matched and maintained custody of customer assets, functions the SEC said required clearing-agency registration. Because the platform also effected transactions for customers, the complaint alleged that it operated as an unregistered broker.

Those characterizations were central to the institutional significance of the filing. Rather than alleging only an unregistered token sale, the SEC applied several components of the conventional securities-market framework to one vertically integrated crypto platform.

Token-offering and fraud allegations

The SEC charged Beaxy founder Artak Hamazaspyan and Beaxy Digital Ltd. over an allegedly unregistered offering of BXY. The agency said the offering raised $8 million and alleged that Hamazaspyan misappropriated at least $900,000 for personal use, including gambling.

Those figures represent amounts alleged by the SEC in its March 29 complaint; they were not independent Coinburn calculations or findings entered by the court on that date. The agency sought injunctions, disgorgement, prejudgment interest and civil penalties while pursuing securities-fraud claims against Hamazaspyan and registration claims against Hamazaspyan and Beaxy Digital.

The complaint also named Brian Peterson and four associated companies. It alleged that they provided market-making services for BXY and another crypto asset while acting as unregistered dealers.

Settlements did not resolve every claim

Alongside the contested claims, the SEC announced that Windy, Murphy, Abbott, Peterson and the associated Braverock entities had agreed to settle without admitting or denying the complaint’s allegations. Their proposed undertakings included stopping the challenged activities, shutting down the platform, accounting for customer assets, returning customer funds and assets, and destroying BXY held by Windy.

The SEC reported agreed civil penalties of $79,200 collectively for Windy, Murphy and Abbott; $6,600 for Peterson; and $80,000 jointly and severally for the Braverock entities. It also reported agreed disgorgement of $10,779 plus prejudgment interest for Windy and $52,000 plus prejudgment interest for the Braverock entities. These were settlement terms disclosed with the filing, not a resolution of the litigated claims against Hamazaspyan and Beaxy Digital.

Why the filing mattered on March 29

Beaxy’s case supplied a concrete test of the SEC’s view that familiar registration categories applied when a crypto venue combined trading, customer intermediation, custody, settlement and market making. Contemporaneous coverage also reported that Beaxy had announced a suspension of operations on March 28, 2023, citing regulatory uncertainty.

No broad-market price or volume reaction can be responsibly attributed to the filing from the reviewed evidence. The event-day significance was regulatory and operational: a federal complaint, proposed shutdown and asset-return undertakings, and an explicit challenge to the integrated structure used by a crypto trading platform.