SEC drops 3-year investigation into Stacks developer Hiro Systems

The crypto community has another reason to celebrate as the U.S. Securities and Exchange Commission (SEC) has dropped its investigation into Hiro Systems, the developer of an integral part of the Bitcoin Layer-2 network Stacks.

The SEC has closed its three-year investigation into Hiro Systems (formerly Blockstack) and will not be imposing any sanctions, a filing from the SEC on July 12 revealed.

The decision comes a day after the SEC concluded its investigation into stablecoin issuer Paxos.

SEC ends 3-year investigation into Hiro

Hiro raised $70 million from token sales between 2017 and 2019 and launched the Stacks mainnet in January 2021. The SEC’s enforcement division later announced an investigation into the company and the Stacks blockchain.

The investigation has been ongoing for the past three years, and Hiro has reportedly complied with the regulator’s requests for information. Earlier this week, the SEC notified Hiro that its staff had completed the investigation.

“On July 9, 2024, we were notified by SEC staff that they had completed their investigation and did not intend to recommend an enforcement action. Given the current state of the regulatory environment in the U.S., this is the best outcome any company in our space could hope for,” Hiro said in a statement Friday.

Launched in January 2021 with a proof-of-transfer consensus mechanism, the Stacks (STX) token has risen sharply following the SEC news. While most altcoins struggle alongside Bitcoin, the STX price has surged from $1.5 to over $1.70. At press time, the token was trading at around $1.69, representing a roughly 5% increase over the past 24 hours.

SEC ends Paxos investigation

As mentioned above, the SEC’s investigation into Hiro Systems comes just a day after announcing a similar outcome for Paxos. The investigation into the US-based crypto company concerned Binance USD (BUSD), a Binance-branded stablecoin issued by Paxos.

Binance stopped supporting BUSD in August 2023 following the SEC investigation.

The SEC announced on Thursday, July 11, 2024, that it had completed its investigation and would not be imposing any sanctions.

“We have completed our investigation into Paxos Trust Companu, LLC. Based on the information we have thus far, we do not intend to recommend an enforcement action against Paxos by the Commission,” the SEC wrote.