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Black Agnus In a significant development, the U.S. Securities and Exchange Commission (SEC) has ceased its three-year examination into Hiro Systems, a prominent blockchain software innovator, previously known as Blockstack. Between 2017 and 2019, the company amassed $70 million through token sales, as stated in a recent filing.
This conclusion signifies a notable triumph for the cryptocurrency sector, which has been grappling with regulatory oversight. This news follows an earlier report by Fortune, detailing the cessation of an investigation into stablecoin issuer Paxos by the SEC.
“With the information currently at our disposal, we do not foresee recommending any enforcement action by the Commission against Hiro Systems PBC, formerly recognized as Blockstack PBC,” remarked the SEC’s enforcement division in a correspondence included in the recent filing.
However, the letter included a standard disclaimer, emphasizing that this notice should not be interpreted as an exoneration or a guarantee against future actions resulting from the investigation.
Hiro is renowned for developing tools that enable programmers to create applications on Stacks, a layer-2 blockchain that augments Bitcoin. Stacks is the brainchild of Muneeb Ali, a veteran in the cryptocurrency industry, who now serves as the CEO of Trust Machines and holds a board position at Hiro.
Decentralization Achieved?
Initially known as Blockstack, the company debuted the Stacks chain and its native token (STX) in 2018. In the early stages, these tokens were treated as securities. A portion of the token sales was conducted under the SEC’s Regulation A+, permitting limited securities sales to the public without registration. Other tokens were sold under exemptions for securities sold exclusively to accredited (Reg D) or international (Reg S) investors.
In January 2021, a revamped version of Stacks was launched with a novel consensus mechanism called proof of transfer. Hiro asserted that the network had achieved full decentralization. In an SEC filing that month, the company declared it no longer provided “essential managerial services to the Stacks Blockchain,” thus it was unnecessary to classify Stacks tokens as securities.
Despite Hiro’s assertions, the SEC remained dubious. By September 2021, Hiro revealed that it was addressing an inquiry from the enforcement division.
The recent filing marks the cessation of this inquiry, lifting a significant burden from the company.
About the Author: Eunji Lim
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