BTC

SEC Closes Another Investigation: Now it's Hiro Systems

by BSCN

July 12, 2024

chain

Hiro Systems welcomed the decision, reaffirming its commitment to regulatory compliance and its mission to support developers building on Bitcoin.

The SEC has ended its three-year investigation into Hiro Systems, formerly known as Blockstack. Hiro, a developer of Bitcoin Layer 2 Stacks, raised $70 million through token sales from 2017 to 2019. The SEC scrutinized these sales, but on July 12, the agency closed the case without recommending enforcement action.

“Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against Hiro Systems PBC, formerly known as Blockstack PBC,” the SEC's Division of Enforcement stated in a letter to Hiro Systems. 

 

The letter contained a standard limitation, indicating it was not a full absolution and that future actions based on the investigation were still possible.

 

Hiro Systems welcomed the decision, reaffirming its commitment to regulatory compliance. In a blog post, they stated:

 

 “This outcome reaffirms our commitment to striving for faithful fulfillment of regulatory compliance and meeting our mission to support developers as they build and innovate on Bitcoin.” 

Hiro Systems, a key player in the blockchain ecosystem, develops tools for creating decentralized applications on Stacks, a Bitcoin layer-2 blockchain. 

Broader Implications for the Crypto Industry

This decision comes amid a broader trend of regulatory relief for the crypto industry. Just a day before, the SEC concluded its investigation into stablecoin issuer Paxos without recommending enforcement action. 

 

Paxos had received a Wells Notice in February 2023, suggesting impending enforcement action over the BUSD stablecoin, issued in partnership with Binance. The SEC claimed BUSD was a security because it generated profits for Binance and Paxos. 

 

SEC maintained that its investigation into Paxos was “active and ongoing” as of July 3rd. However, the agency’s stance shifted after a federal judge ruled in favor of Binance on June 28th, holding that sales of BUSD did not constitute a securities offering. This ruling led the SEC to drop the charge, offering clarity and relief to the market.

Disclaimer

Disclaimer: The views expressed in this article do not necessarily represent the views of BSCN. The information provided in this article is for educational and entertainment purposes only and should not be construed as investment advice, or advice of any kind. BSCN assumes no responsibility for any investment decisions made based on the information provided in this article. If you believe that the article should be amended, please reach out to the BSCN team by emailing [email protected].

;