The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C.
The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C., U.S., May 12, 2021. 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.

Lawyers for the firm and the executives other than Hamazaspyan said they are "are looking forward to the continuing development of cryptocurrency and blockchain and its integration into globally regulated markets."

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.