“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. The SEC alleges Beaxy founder Artak Hamazaspyan illegally raised $8 million in an unregistered offering of its Beaxy token. The SEC said in a press release Kraken has illegally made “hundreds of millions of dollars” since 2018, and alleges it “has deprived investors of significant protections” by operating while unregistered. Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world’s media organizations, industry events and directly to consumers.

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. Beaxy suspended services on its exchange and ceased operations “due to the uncertain regulatory environment surrounding our business,” the company said on its website—the SEC said in a statement Beaxy agreed to shut down the platform. The Securities and Exchange Commission sued Kraken, one of the largest cryptocurrency exchanges, on Monday, alleging it had illegally operated without registering as a securities exchange—marking the latest step in the SEC’s push to regulate cryptocurrency. The charges filed in Chicago federal court expand a crackdown by U.S. prosecutors and regulators on alleged abuses in the digital asset industry.

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The lawsuit against Kraken—which has the formal name of Payward Inc. and Payward Ventures Inc—is the latest SEC lawsuit targeting cryptocurrency exchanges as the agency works to regulate the crypto sector. SEC Chairman Gary Gensler has indicated for years that crypto would face tougher regulation, suggesting many cryptocurrencies other than bitcoin should be regulated under federal securities laws and arguing beaxy review the market was full of “fraud, scams and abuse” due to the lack of investor protections. The crypto industry has pushed back against these efforts, arguing current securities laws aren’t compatible with cryptocurrency and accusing the SEC of being overly aggressive. It filed suit against Binance in June, alleging that the company was operating an illegal exchange in the U.S. and misused customer funds.

  • Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day.
  • On Monday, the Commodity Futures Trading Commission sued Binance, accusing the world’s largest crypto exchange of violating rules preventing illegal activity.
  • It filed suit against Binance in June, alleging that the company was operating an illegal exchange in the U.S. and misused customer funds.
  • Hamazaspyan also allegedly misappropriated at least $900,000 for personal use, including gambling, the SEC said.
  • In March, the SEC charged Beaxy, another cryptocurrency trading platform, for failing to register as an exchange and alleging the founder misappropriated customer money—the exchange shut down over the SEC charges.

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. 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. “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. Hamazaspyan also allegedly misappropriated at least $900,000 for personal use, including gambling, the SEC said. In February, Kraken agreed to stop offering its staking services and to pay a penalty of $30 million as a settlement with the SEC.

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In March, the SEC charged Beaxy, another cryptocurrency trading platform, for failing to register as an exchange and alleging the founder misappropriated customer money—the exchange shut down over the SEC charges. Meanwhile, mega-exchange FTX collapsed last year and its founder Sam Bankman-Fried was found guilty of fraud earlier this month. In the past few months, a number of crypto firms have been hit with civil lawsuits, as U.S. regulators crack down on the budding industry. Most notably, cryptocurrency giant FTX collapsed last year and its founder Sam Bankman-Fried was charged with fraud. The lawsuit argues many of the crypto assets that customers can trade on Kraken legally count as securities, meaning Kraken is required to register with the SEC—but instead, Kraken has simultaneously operated as a securities exchange, broker, dealer and clearing agency without registering with federal regulators. 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.”

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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. She has received awards for her work from the Society for Advancing Business Editing and Writing and the Newswomen’s Club of New York.

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Kraken said in a statement it plans to “vigorously defend our position in court.” The company argued courts have rejected a previous attempt by the SEC to count crypto assets as securities. “The complaint against Kraken alleges no fraud, no market manipulation, no customer losses due to hacking or compromised security, and no breaches of fiduciary duty,” the statement read. On Monday, the Commodity Futures Trading Commission sued Binance, accusing the world’s largest crypto exchange of violating rules preventing illegal activity. Windy and its current managers agreed to pay $79,200 in civil penalties but did not admit to or deny the SEC’s allegations, the agency said, but the SEC is still litigating securities fraud charges filed against Hamazaspyan. The SEC alleges that when Windy Inc. took over the platform from Hamazaspyan in 2019, the new managers continued using Beaxy for trading crypto assets “that were offered and sold as securities” and in turn violated securities law. 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.

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