The crypto community achieved another significant victory against the US Securities and Exchange Commission (SEC) as the regulator halted its investigations into Stacks, a prominent Bitcoin layer-2 network.
On July 12, Hiro Systems, the developer behind Stacks, revealed that the SEC had informed them on July 9 about the decision to end the probe. Hiro had raised $70 million from token sales between 2017 and 2019.
SEC Drops Investigations Into Stacks
In its letter, the SEC’s enforcement division indicated that it would not recommend any enforcement action against the firm. However, the notice clarified that this decision should not be seen as an exoneration or a guarantee that future actions wouldn’t arise from the investigation.
Muneeb Ali, a board member of Hiro Systems, expressed that this outcome is the best a company in the industry could hope for, but the US regulations still need improvement. He highlighted that Stacks had the first-ever SEC-qualified offering in 2019 and became decentralized before its mainnet launch in January 2021. Despite this, the SEC began its investigation in July 2021.
“We need a regulatory system that meets builders of innovative open protocols where they are. We’ll continue working with policymakers and developers to help make this happen. The closing of the Stacks investigation gives us hope for a bright future for decentralized technologies for Bitcoin and the next-generation internet,” Ali stated.
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The SEC’s decision outraged the crypto community, noting that Stacks’ compliance efforts did not shield it from scrutiny. Billionaire investor Mark Cuban remarked that while the SEC’s move is positive, it still presents risks for projects aiming to work closely with the regulator.
“If you needed any further confirmation of the craziness at the SEC… It’s not that they dropped their probe… It’s crazy because Stacks was one of the VERY FEW tokens that went through the process of getting approved to raise money with their token back in 2019,” Cuban commented.
Meanwhile, this decision comes during a notable week for Stacks’ STX token, which saw a nearly 20% increase over the past seven days. According to BeInCrypto, it trades at around $1.7 as of press time.
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Notably, this is the second crypto-related investigation the SEC dropped this week. On July 11, Paxos announced that the SEC decided against taking enforcement action regarding its investigation into the Binance USD (BUSD) stablecoin.
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