SEC drops three-year investigation into Stacks protocol

• 
  SEC
  dropped
  its
  investigation
  into
  Bitcoin
  Layer
  2
  network
  Stacks.
• 
  SEC
  began
  investigating
  Hiro
  Systems
  and
  Stacks
  protocol
  in
  2021
  after
  the
  protocol
  became
  fully
  decentralized.
• 
  STX
  is
  up
  over
  5%
  following
  the
  announcement.

STX shot
up
more
than
5%
on
Friday
following
news
that the
Securities
&
Exchange
Commission
(SEC)
dropped
a
three-year
investigation
into
Hiro
Systems
and
its
Bitcoin
Layer
2
protocol
Stacks after
three
years
of
investigation.

SEC
terminates
Stacks
investigation,
another
win
for
crypto

Hiro
Systems
PCB,
the
developers
behind

Bitcoin
Layer-2
protocol
Stacks,
disclosed
that
the
SEC
has
dropped
its
probe
into
the
company
and
the
Stacks
protocol,
with
no
intention
to
take
legal
action
against
them.
The
company
received
the
notice
earlier
this
week,
alongside
a
regulatory
filing
the
SEC
sent
on
Friday.

“Earlier
this
week,
we
received
word
from
the
SEC
that
after
3
years,
they
are
terminating
their
investigation
into
the
Stacks
blockchain
(the
protocol)
and
Hiro
System
(a
company)
with
no
action,”
co-founder
Muneeb
Ali
stated
in
an
X
post
on
Friday.

The
SEC
investigated
Stacks
and
Hiro
Systems
for
three
years
after
the
regulator
claimed
it
suspected
that
STX
was
being
sold
as
a
security.
The
whole
issue
dates
back
to
2018,
after
the
company’s
initial
launch
of
STX,
when
it
sold
the
tokens
as
securities
under
the
SEC’s
Regulation
A+.
The
regulation
permitted
a
limited
public
sale
of
securities
without
full
registration,
allowing
Hiro
to
raise
over
$20
million
from
sales
of
STX.

In
2021,
Stacks
became
fully
decentralized
following
the
launch
of
a
new
version
of
its
protocol.
This
led
the
SEC
to
begin
an
investigation
into
Stacks
in
June
of
the
same
year.
However,
Hiro
Systems
claimed
it
provided
all
the
information
required
during
the
investigation. 

“For
3+
years,
we
have
provided
all
requested
information
and
worked
to
explain
how
the
Stacks
network
works,
and
Hiro’s
role
as
a
developer
tooling
company,”
Ali
said.

Many
crypto
community
members
highlighted
the
termination
of
the
SEC’s
Stacks
probe
as
a
big
win
for
the
general
crypto
industry,
considering
it
adds
to
a
list
of
crypto
investigations
the
agency
has
dropped
in
past
months.
The
latest
of
these
involved
Paxos
Labs’
BUSD
token,
which
was
relieved
of
SEC
suspicion
following
a
“formal
termination
notice”
that
the
company
received
on
July
9.

Following
the
announcement
of
the
SEC
ending
its
investigation,
the
price
of
STX
rose
by
5%.