SEC drops 3-year investigation into Stacks developer Hiro Systems

Crypto community has another reason to celebrate as the U.S. Securities and Exchange Commission (SEC) has dropped its investigation against Hiro Systems, a developer firm integral to the Bitcoin Layer-2 network Stacks.

A SEC filing on July 12 revealed that the regulator had closed its three-year investigation into Hiro Systems (formerly Blockstack) and would not be pursuing an enforcement action.

The decision comes just a day after the SEC ended its investigation against stablecoin issuer Paxos.

SEC ends 3-year investigation into Hiro

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

The probe went on for the past three years, with Hiro reportedly complying with the regulator’s requests for information. Earlier this week, the SEC informed Hiro that its staff had concluded their investigation.

“On July 9, 2024, we were informed by the staff of the SEC that they had concluded their investigation and do not intend to recommend an enforcement action. Given the current state of the regulatory environment in the US, this is the best outcome any company in our space can hope for,” Hiro said in an announcement on Friday.

The Stacks (STX) token, which launched with the proof of transfer consensus mechanism in January 2021, rose sharply following the SEC news. While most altcoins struggled alongside Bitcoin, STX price jumped from lows of $1.5 to above $1.70. The token traded around $1.69 at the time of writing, about 5% up in the past 24 hours.

SEC ended Paxos probe

As noted above, SEC’s conclusion of the probe into Hiro Systems comes just a day after it announced a similar outcome for Paxos. The investigation into the US-based crypto company related to Binance USD (BUSD), a Binance-branded stablecoin that Paxos issued.

Binance halted BUSD support in August 2023 amid the SEC investigation.

On Thursday, July 11, 2024 the SEC announced it concluded its probe and would not pursue an enforcement action.

“We have concluded the investigation as to Paxos Trust Companu, LLC. Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against Paxos,” the SEC wrote.