The club’s board said in a statement it made the decision due to the withdrawal of the club’s licence and its financial situation.
“The board also decided to immediately release the players from their obligations,” it said.
Chagaev said in a separate statement he would submit an explanation for the decision to Geneva cantonal prosecutor Yves Bertossa.
Xamax was left out of this week’s Swiss Super League’s championship race due to Chagaev’s actions, the SFL said on January 18th.
Chagaev, 51, bought Xamax in May 2011 from its former president Sylvio Bernasconi, for an estimated 1.2 million francs (one million euros).
Among the accusations he faces are failing to pay his players for several months and not paying payroll taxes.
The disciplinary committee of the SFL also cited a probe into allegations Chagaev submitted a falsified bank document to prove his solvency during a bankruptcy trial.
The action was the latest in a series of actions taken by the football authorities against the club.
Last month, the SFL docked Xamax four points for breaches of licensing rules and reported the club to its disciplinary committee.
In November it imposed a fine of 20,000 francs for failing to provide “information and financial documents” following Chagaev’s takeover.