Author: Nancy, PANews
At a time when the coin-stock concept is being hyped, a tweet stating 'millions of dollars frozen' instantly pushed MyStonks into the spotlight. Keywords such as fund security, trading platforms, and compliance risks quickly ignited investors' nerves, and panic spread rapidly in the community.
In the face of doubts and speculations, MyStonks quickly responded that this freezing is only targeted at a single user and is to cooperate with regulatory investigations. They have contacted the involved user to guide them in completing the necessary compliance information submissions. This fund freezing incident has ignited discussions about the security and compliance qualifications of coin-stock platforms, and a commercial struggle seems to be unfolding.
The freezing of large amounts of funds is to cooperate with regulatory investigations, and ordinary users' deposits and withdrawals are not affected.
On August 13, a user posted on the social platform X claiming that they deposited over $7 million withdrawn from Binance into MyStonks, but about $6.2 million was frozen, the withdrawal channel was closed, and funds were dispersed because the platform required them to submit materials to complete the risk control review. This news quickly attracted attention, raising questions about MyStonks' security, especially after being labeled a phishing site by OKX, further intensifying the trust crisis.
In response to the incident, MyStonks officially stated that the platform recently received a regulatory enforcement request concerning a specific user. After receiving the request, the compliance team immediately contacted the relevant user through secure channels and provided detailed information submission procedures. All collected information will be securely stored and shared only within the legal requirements. This investigation only concerns a single user, covering issues such as anti-money laundering, associations with criminal organizations or fraud groups, drug transactions, evasion of sanctions, and suspicious activity reports. Ordinary users' deposit and withdrawal operations are not affected by this investigation and can proceed normally.
At the same time, MyStonks founder Bruce J also held a Space on the X platform to provide detailed explanations about the incident. According to Bruce J, the compliance team received a law enforcement request for a single customer last week and has contacted the customer to assist in providing relevant documentation. However, at this stage, the user has provided limited information, and it is still unclear when the funds will be unfrozen.
According to Bruce J, under the constraints of the Bank Secrecy Act, stock trading may trigger scrutiny for 'single or multiple cumulative transactions exceeding $1 million'. If abnormalities are found, a Suspicious Activity Report (SAR) must be submitted to FinCEN. Therefore, the targeted investigation and withdrawal suspension for this user is not the platform's autonomous behavior; cooperating with regulatory investigations is a legal obligation for every exchange, and the investigation does not imply that there are issues with the customer's funds. He urged the public not to overinterpret the incident and stated that specific investigation information will be directly sent to the user to protect their privacy.
He further disclosed that since its establishment, the platform has registered over 20,000 users, processing approximately 500 to 800 deposits and withdrawals daily, 99% of which have no issues. Just in the past 24 hours, MyStonks completed over 400 user withdrawal transactions, with an average processing time of 28 seconds.
"The safety of every user's assets and accounts is our lifeline. We have never lost or misappropriated a single cent of users' funds. For losses incurred by users due to product/transaction-related platform negligence, we insist on full compensation. Regarding online rumors of 'running away' and 'fraud', we urge everyone to obtain accurate information through regular legal channels, and not to believe or spread rumors," emphasized Bruce J.
According to Yu Xian, the founder of the security agency Slow Fog, the user's frozen funds mainly came from withdrawals from Binance, and the DEX interactions involved the exchange of STONKS and USDT. If MyStonks cooperates with law enforcement requests and risk control behavior is established, attention must be paid to the target user's financial transactions on Binance.
In response to compliance qualifications and operational models, emphasizing that compliance risk control is the core objective.
The fund freezing incident on the MyStonks platform has attracted widespread attention and sparked discussions and doubts about the platform's compliance qualifications and operational model.
Some users believe that the platform's excessive emphasis on its MSB license may cover up deficiencies in compliance with securities trading regulations, misleading non-US investors through information asymmetry; some users question that MyStonks packages private placement filings as comprehensive compliance permits, using ordinary investors' unfamiliarity with US securities regulations for marketing; others point out that the platform's practice of freezing funds rather than directly returning them differs from standard operational practices of financial institutions and may reflect flaws in its compliance system.
In response to the aforementioned doubts, MyStonks officially made the following statement.
The official emphasized that MyStonks is a fully compliant and regulated platform, holding a financial services business (MSB) license from the US FinCEN and has completed the US SEC's securities token offering (STO) filing. The platform always adheres to the principle of legal and compliant operation, strictly following regulatory requirements and risk control policies.
Regarding compliance details, MyStonks pointed out that the Form D it submitted is a federal filing required by the SEC, which needs to meet clauses such as Rule 504 / 506, including investor qualification verification, information disclosure, and compliance with anti-fraud clauses. This applies to entities issuing securities under Regulation D exemptions. MyStonks strictly adheres to the requirements of Regulation D and Regulation S when submitting Form D. Regulation S explicitly allows the issuance of securities to non-US investors outside of the United States, which is a legally recognized path for cross-border issuance by the SEC.
MSB registration is managed by FinCEN under the US Department of the Treasury, which is an important step into the US compliance system. After registration, businesses must comply with the Bank Secrecy Act and FinCEN's anti-money laundering regulations, including customer due diligence (KYC), anti-money laundering monitoring (AML), and suspicious transaction reporting (SAR). MyStonks submits AML reports annually as required and undergoes oversight and examination by FinCEN. MSB registration is not only a confirmation of compliance identity but also the beginning of ongoing regulatory obligations.
At the same time, MyStonks emphasized that not all of its businesses fully belong to STO; therefore, some assets are functional tokens or digital goods, which do not fall under the category of securities regulation and are not subject to Regulation D investor restrictions.
It is worth noting that, according to MyStonks, since its establishment, some users have used MyStonks as a 'mixing machine,' which has already been intercepted by the compliance department; the core goal of compliance risk control is to ensure the safety of the platform and users, preventing it from being used for any illegal activities, including terrorist organizations, human trafficking, drug transactions, money laundering, fraud, market manipulation, insider trading, etc., thus meeting the legal compliance requirements of global regulatory agencies.
From website attacks to abnormal fund flows, the shadow of a business war is emerging.
After the rights protection incident escalated, MyStonks revealed that its website suffered a DDoS attack and received a large number of complaints and reports. At the same time, the funding behavior of the rights protection user has also attracted market attention. This series of events has sparked speculation about the possibility of a business war.
For example, according to KOL @OxMayyy's analysis, the funds of this rights protection user have almost no substantial transactions; they withdraw funds within an hour of each deposit, and the funds do not return to the original deposit address. Such operations naturally trigger risk control; plus, single or cumulative fund flows exceeding one million dollars may face regulatory scrutiny. At the same time, MvStonks recently suffered a DDoS attack, indicating that the platform's influence is expanding. Therefore, this controversy seems more like market pressure on a growing platform, so she tends to view this event as a business war rather than a simple rights protection incident.
According to @CryptoPainter_X, the party involved had previously shared their trading experience in a group called Biyapay under the identity of 'Uncle' and stated that their account had a large amount of funds while giving positive feedback on the platform experience. This screenshot was also shared by the official Biyapay account, and Biyapay and MyStonks are in direct competition in terms of business model. In his view, this resembles a premeditated act of commercial defamation, but there is currently no conclusive evidence.
Infini co-founder @Princess Christine also stated that in the battlefield of commercial competition, there are always some opponents who choose to use despicable means: first, they spread negative information on social platforms, then disrupt normal operations through technical attacks, and finally leverage panic messages to undermine user trust. For those who have experienced these, it is often a signal that your business has touched the core of the market. She believes that the real battle is not just about revenge but also about protecting one's achievements and defending one's stance.
Interestingly, after the MyStonks freezing incident, Biyapay not only emphasized multiple risk controls and fund isolation protection measures but also launched an asset migration reward activity. Users who complete any transaction on Biyapay using MyStonks' deposit address can receive rewards. This initiative is interpreted in the industry as both an incentive and protection for users, encouraging safe fund migration, and is seen as a market strategy against competitors.
In response to the online public opinion storm, MyStonks stated that it deeply regrets the recent attempts to slander the platform's security by spreading negative information under the guise of compliance risk control. This is also an inevitable path for a new asset trading platform.