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Digital asset trading exchange Beaxy has shut down after the U.S. Securities and Exchange Commission (SEC) filed charges against it for operating an unregistered securities exchange.

In its lawsuit, filed Wednesday at the Northern District of Illinois, the securities regulator also accused the platform of failing to register as a broker and a clearing agency.

It further charged founder Artak Hamazaspyan with conducting an unregistered offering in which he raised $8 million from selling Beaxy tokens (BXY). Hamazaspyan also allegedly misappropriated at least $900,000 for personal use, including gambling.

Following the lawsuit, Beaxy has announced that it’s winding up its operations. In a blog post, the exchange revealed it would suspend all services immediately “due to the uncertain regulatory environment surrounding our business.”

The exchange claimed it would make all funds available for withdrawal in 24 hours after canceling all orders and verifying balances.

“We strongly advise you to withdraw any remaining assets within 30 days to avoid unnecessary complications and delays,” the exchange told its users.

While the charges by the SEC portrayed the exchange as an entity that knowingly and consistently violated securities and financial laws, Beaxy claimed that it has been working with the regulator since its launch. It claimed to have “provided information, data, and interviews to assist regulators in whatever manner we could.”

“Unfortunately, despite our best efforts, it has become clear that the regulatory environment is just too uncertain to continue operations,” Beaxy stated.

The SEC’s narrative is markedly different. The regulator claims that after raising $8 million through the unregistered securities, founder Hamazaspyan was pushed to resign in October 2019, and Nicholas Murphy and Randolph Bay Abbott took over. Through their firm Windy, Inc., they operated Beaxy until its shutdown this week.

The lawsuit also pulled in Brian Peterson, who allegedly provided market-making services for Beaxy through his companies Braverock Investments LLC and Future Digital Markets Inc. By offering these services, Peterson acted as an unregistered dealer.

“We allege that Beaxy and its affiliates performed the functions of an exchange, broker, clearing agency, and dealer without registering with the Commission and complying with clear, time-tested rules governing those activities,” commented SEC chair Gary Gensler.

“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.”

Watch: The Future of Digital Asset Exchanges & Investment

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