Author: Nancy, PANews
At a time when the stock and cryptocurrency concept was being hyped, a tweet about 'millions of dollars being frozen' instantly put the popular stock cryptocurrency platform MyStonks in the spotlight. Keywords like fund security, trading platform, and compliance risk quickly ignited investors' nerves, and panic spread rapidly in the community.
In response to doubts and speculations, MyStonks quickly responded that this freezing only targets a single user, aimed at cooperating with regulatory investigations, and has already contacted the involved user to guide them in completing the necessary compliance information submission. This fund freezing incident has sparked discussions about the security and compliance qualifications of cryptocurrency stock platforms, and a commercial power struggle seems to be unfolding. This article will review the beginning and end of the incident and MyStonks's response measures.
The freezing of massive funds is to cooperate with regulatory investigations, and general users' deposits and withdrawals are not affected.
On August 13, a user posted on the social platform X, claiming that they had deposited over 7 million dollars withdrawn from Binance into MyStonks, but about 6.2 million dollars of it was frozen, with the withdrawal channels closed and funds dispersed, because the platform required them to submit materials to complete the risk control review. The news quickly attracted attention, raising market doubts about MyStonks's security, especially since it was marked as a phishing site by OKX, further exacerbating the trust crisis.
In response to the incident, MyStonks officially stated that the platform recently received a regulatory enforcement request regarding 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 involves a single user and includes matters such as anti-money laundering, associations with criminal organizations or fraud groups, drug trafficking, sanctions evasion, and suspicious activity reporting. General users' deposit and withdrawal operations are not affected by this investigation and can proceed normally.
At the same time, MyStonks founder Bruce J also hosted a Space on the X platform to provide a detailed explanation of the incident. According to Bruce J, the compliance team received a law enforcement request regarding a single customer last week and has contacted the customer to assist in providing relevant proof materials, but at this stage, the user has provided limited information and it is still unclear when the funds will be unfrozen.
According to Bruce J's explanation, under the constraints of the Bank Secrecy Act, stock transactions may trigger a review if there are 'single or cumulative transactions exceeding 1 million dollars.' If abnormalities are found, a SAR must be submitted to FinCEN. Therefore, the targeted investigation and withdrawal suspension of the user is not an autonomous action by the platform; cooperating with regulatory authorities is a legal obligation for every exchange, and the investigation does not imply that the client's funds are problematic. He urged the public not to over-interpret the incident and stated that specific investigation information would be sent directly to users to protect their privacy.
He further revealed that since its establishment, the platform's registered user count has exceeded 20,000, handling approximately 500 to 800 deposits and withdrawals daily, with 99% having no issues. In just 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 penny of users' funds. For user losses caused by platform negligence due to products/transactions, we insist on full compensation. Regarding online rumors of 'running away' and 'fraud' malicious slanders, we urge everyone to obtain accurate information through formal and legal channels, not to believe or spread rumors." Bruce J emphasized.
According to Yu Xian, the founder of the security agency Slow Fog, the user's frozen funds mainly come from Binance and involve DEX interactions related to STONKS and USDT exchanges. If MyStonks cooperates with law enforcement requests, risk control actions need to focus on the target user's fund flows on Binance.
Responding to compliance qualifications and operating models, emphasizing that compliance risk control is the core goal.
The fund freezing incident on the MyStonks platform has attracted widespread attention and sparked discussions and doubts in the market about the platform's compliance qualifications and operating model.
Some users believe that the platform's excessive emphasis on its MSB license may mask deficiencies in securities transaction compliance and use information asymmetry to mislead non-U.S. investors; some users question that MyStonks packaged private placement filing as comprehensive compliance permission, marketing to ordinary investors unfamiliar with U.S. securities regulations; others pointed out that the platform's practice of freezing funds instead of directly returning them is a marketing tactic that exploits ordinary investors' unfamiliarity with U.S. securities regulations.
In response to the above doubts, MyStonks made the following official statement.
The official emphasized that MyStonks is a fully compliant and regulated platform, holding a U.S. FinCEN Money Services Business (MSB) license, and has completed the U.S. SEC registration for security token offerings (STO). The platform always adheres to the principle of legal and compliant operations, strictly adhering to regulatory requirements and risk control policies.
In terms of compliance details, MyStonks pointed out that the Form D it submitted is a federal filing required by the SEC, which must comply with Rule 504/506 and other provisions, including investor qualification verification, information disclosure, and anti-fraud clause compliance. This applies to entities issuing securities under Regulation D exemptions. MyStonks strictly follows Reg S, which clearly allows issuing securities to non-U.S. investors outside the United States, which is a legally recognized cross-border issuance path approved by the SEC.
MSB registration is managed by FinCEN under the U.S. Department of the Treasury, which is an important step into the U.S. compliance system. After registration, companies must comply with the Bank Secrecy Act and FinCEN 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 is subject to FinCEN's supervision and review. MSB registration not only confirms compliance status but also marks the beginning of ongoing regulatory obligations.
At the same time, MyStonks emphasized that its entire business does not entirely fall under STO, so some assets are functional tokens or digital goods, which are not under 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 service,' which has already been intercepted by compliance departments; 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 terrorism, human trafficking, drug trafficking, money laundering, fraud, market manipulation, insider trading, and insider compliance requirements.
From website attacks to abnormal fund flows, suspicions of commercial warfare emerge.
After the rights protection turmoil escalated, MyStonks revealed that its website had suffered a DDoS attack and received numerous complaints and reports. At the same time, the funding behavior of rights protection users also attracted market attention. This series of events has sparked speculation about the possibility of commercial warfare.
For example, according to analysis by KOL @OxMayyy, the rights protection user's funds had almost no substantial transactions, withdrawing shortly after each deposit, and not returning to the original deposit address; such operations naturally triggered risk control. Additionally, single or cumulative fund flows over 1 million dollars may be subject to regulatory scrutiny. At the same time, MyStonks has also 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, leading her to view this incident as a commercial battle rather than a mere rights protection issue.
According to @CryptoPainter_X, the person involved had previously shared their trading experience in a group called Biyapay under the alias 'Uncle' and had stated that their account had a large amount of funds, while also giving positive feedback on the platform experience. Screenshots had also been forwarded by the official Biyapay account, and Biyapay and MyStonks happen to constitute direct competition in their business models. In his view, this appears to be a premeditated commercial smear tactic, but there is currently no conclusive evidence.
KOL @CryptoFearless has created a graphic and posted to detail the related individuals and institutions, stating that the victim is suspected to have a beneficial relationship with Biyapay, noting that a news piece from 2019 shows that BIYA GLOBAL LIMITED received strategic investments from GDFX GLOBAL's Hong Kong branch and Kowloon Capital. GDFX GLOBAL is a forex and CFD broker platform that has been warned and blacklisted in places like New Zealand and Hong Kong.
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 spreading negative news all over social platforms, then disrupting normal operations through technical attacks, and finally using panic messages to undermine user trust. For those who have experienced this, it is often a signal that your business has hit the core of the market. She believes that the real battle is not only for revenge but also to protect one's achievements and defend one's position.
Interestingly, after the MyStonks freezing incident occurred, Biyapay not only emphasized multiple risk controls and fund isolation protective measures but also launched an asset migration reward activity, where users could receive rewards for completing any transaction in Biyapay using MyStonks' deposit address. This measure is interpreted within the industry as both an incentive and protection for users, encouraging safe fund migration, while also seen as a market strategy against competitors.
Regarding the public opinion storm online, MyStonks responded that there have been recent attempts to smear the platform's security by spreading negative messages under the guise of compliance risk control, which they deeply regret, stating that this is also an inevitable path for a new asset trading platform.
(The above content is authorized excerpt and reprint from our partner PANews, original link)
"Behind the MyStonks Storm: Users' Massive Funds Cooperate with Regulatory Investigation, 'Commercial Warfare' Suspicions Emerge" This article was first published on (Blockchain Client).
