Controversial 3-Year SEC Investigation Into Bitcoin L2 Stacks Concludes With No Charges

by

As an experienced financial analyst, I have closely followed the developments surrounding the investigation of Stacks (STX) and Hiro Systems by the US Securities and Exchange Commission (SEC). The recent announcement that the SEC has dropped its three-year probe into these entities comes as a relief for the industry players involved.

The SEC has completed a three-year probe into Stacks (STX) and Hiro Systems, two entities in the Bitcoin Layer 2 (L2) blockchain space, without initiating any enforcement actions.

SEC Ends Probe Into Stacks

Muneeb Ali, one of the founders of the Stacks protocol, took to social media on Friday to share that the Securities and Exchange Commission (SEC) investigation against them has come to an end. Ali expressed relief and contentment with the resolution, sharing that they had provided all necessary information and clarified the functions of the Stacks network and Hiro’s role as a development tooling company. Ultimately, the SEC chose to close the probe.

It’s satisfying that the SEC chose to conclude their investigation following our cooperation, marking an ideal result for companies in our sector. However, there is room for improvement in our regulatory framework. We advocate for a system that effectively supports pioneers of groundbreaking open protocols. Collaboration with lawmakers and developers will remain a priority as we strive towards this goal. The termination of the Stacks investigation serves as an encouraging sign for the future of decentralized technologies, paving the way for Bitcoin and the next-generation internet.

This latest incident represents another disappointment for the regulatory body following its decision to abandon a probe into brokerage firm Paxos over their collaboration with Binance‘s BUSD stablecoin, which a judge eventually determined did not qualify as a security under the SEC’s Howey test after an extensive investigation that lasted a year.

No Exoneration Or Guarantee Of Future Action

In a letter penned on July 9, the Securities and Exchange Commission (SEC) communicated to the Stacks protocol that its investigation into Hiro Systems, previously known as Blockstack, had been completed with no intention of proposing any enforcement action against the company.

The SEC made it clear that the receipt of this notice does not signify dismissal from their investigation, nor does it ensure that no further actions will be taken against the subject matter under review. The letter goes on to state:

Under the instructions outlined in the last section of Securities Act Release No. 5310, we are issuing this notice. It is important to note that this notice should not be interpreted as a clearance or an indication that no further actions may ensue from the staff’s ongoing investigation.

In a recent blog update, Hiro Systems disclosed that the Securities and Exchange Commission (SEC) launched an investigation into Hiro and the Stacks blockchain back in January 2021. The company cooperated fully by providing necessary information and clarified the functions of the Stacks network as well as Hiro’s role within it.

We remain committed to empowering developers and firmly believe that establishing a transparent regulatory framework is essential in the US. We eagerly anticipate more chances to influence policy and support creators of groundbreaking open protocols. The conclusion of the Hiro and Stacks investigation brings optimism for Bitcoin’s future and the next phase of the internet.

Controversial 3-Year SEC Investigation Into Bitcoin L2 Stacks Concludes With No Charges

The price of STX, the native token of the Stacks blockchain, currently stands at $1.68. This represents a notable increase of more than 5% within the past 24 hours, which can be attributed to the recent regulatory win against the US Securities and Exchange Commission (SEC).

Read More

2024-07-13 03:41