Behind the turmoil of the popular coin stock platform MyStonks, users' huge funds combined with regulatory investigations have raised suspicions of a "business war."

Author: Nancy, PANews

As the stock and cryptocurrency concept was being hyped up, a tweet stating "millions of dollars have been frozen" instantly put MyStonks in the spotlight. Keywords such as fund security, trading platform, and compliance risk quickly ignited investors' nerves, and panic spread rapidly through the community.

In response to doubts and speculation, MyStonks quickly replied that this freeze is only targeted at a single user, in order to cooperate with regulatory investigations, and has already contacted the user involved to guide them in completing the necessary compliance information submission. This fund freeze incident has sparked discussions about the security and compliance qualifications of the coin-stock platform, and a commercial struggle seems to be unfolding. This article will review the events from beginning to end and the measures taken by MyStonks.

The large amount of frozen funds is in cooperation with regulatory investigations, and ordinary users' deposits and withdrawals are not affected.

On August 13, a user posted a message on the social platform X stating that they deposited over $7 million withdrawn from Binance to MyStonks, but approximately $6.2 million was frozen, the withdrawal channels were closed, and the funds were dispersed, as the platform required them to submit materials to complete a risk control audit. This news quickly attracted attention and raised market concerns about the safety of MyStonks, 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 regulatory enforcement requests 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 scope of legal requirements. This investigation involves only a single user and includes matters such as anti-money laundering, connections to criminal organizations or fraud groups, drug trafficking, sanctions evasion, and suspicious activity reporting. The deposit and withdrawal operations of ordinary users 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 a detailed explanation of the incident. According to Bruce J, the compliance team received a law enforcement request concerning a single client last week and has contacted the client to assist in providing relevant proof materials, but at this stage, the information provided by the user is limited, and it is still uncertain when the account will be unfrozen.

According to Bruce J, under the constraints of the Bank Secrecy Act, stock trading has a chance of being reviewed for "transactions that accumulate to more than $1 million for a single or multiple transactions." If any anomalies are found, a SAR must be submitted to FinCEN. Therefore, the targeted investigation and withdrawal suspension for this user is not an independent action of the platform; cooperating with regulatory authorities in investigations is a legal obligation for every exchange. An investigation does not imply that there is an issue with customer 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's registered user count has exceeded 20,000, processing approximately 500 to 800 deposits and withdrawals daily, with 99% being problem-free. In the past 24 hours alone, MyStonks completed over 400 user withdrawal transactions, with an average processing time of 28 seconds.

"The safety of each user's assets and accounts is our lifeline. We have never lost or misappropriated a single penny of our users. For losses incurred by users due to platform negligence related to products/trading, we insist on full compensation. Regarding malicious rumors of 'running away' and 'fraud', we urge everyone to obtain accurate information through formal and legal channels, and not to believe in or spread rumors," emphasized Bruce J.

According to Yu Xian, the founder of the security agency Slow Fog, the frozen funds of the user mainly originated from withdrawals on Binance, and the DEX interaction involved the exchange of STONKS and USDT. If MyStonks cooperates with law enforcement requests and risk control actions are established, attention should be paid to the target user's fund transactions on Binance.

Responding to compliance qualifications and operational models, emphasizing that compliance risk control is the core objective.

The capital freeze incident of the MyStonks platform has attracted widespread attention and sparked discussions and doubts in the market regarding the platform's compliance qualifications and operating model.

Some users believe that the platform overemphasizes its MSB license, which may cover up deficiencies in compliance with securities trading, misleading non-U.S. investors through information asymmetry; some users question that MyStonks packages private placement filings as comprehensive compliance licenses, marketing by taking advantage of ordinary investors' unfamiliarity with U.S. securities regulations; others point out that the platform's practice of freezing funds instead of directly returning them differs from the norms of financial institution operations, which may reflect flaws in its compliance system.

In response to the above concerns, 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 Securities Token Offering (STO) filing with the US SEC. The platform always follows the principles of legal and compliant operations, strictly adhering to regulatory requirements and risk control policies.

In terms of compliance details, MyStonks points out that the Form D it submitted is a federal filing required by the SEC, which needs to meet provisions such as Rule 504 / 506, including investor qualification verification, information disclosure, compliance with anti-fraud provisions, etc. This applies to entities issuing securities under Regulation D exemptions. MyStonks strictly follows the requirements of Regulation D and Regulation S when submitting Form D. Regulation S explicitly allows the issuance of securities to non-U.S. investors outside the United States, which is a legally recognized cross-border issuance pathway 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, 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), suspicious activity reporting (SAR), and more. MyStonks submits AML reports annually as required and is subject to FinCEN's oversight and review. MSB registration is not only a confirmation of compliance identity but also the beginning of ongoing regulatory obligations.

At the same time, MyStonks emphasizes that its entire business does not fully fall under STO, therefore some assets are functional tokens or digital goods, which are not within the scope 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 "mixer," which has been intercepted by the compliance department; the core objective 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, etc., thereby meeting the legal compliance requirements of global regulatory bodies.

From website attacks to unusual fund flows, business warfare suspicions emerge.

After the escalation of the rights protection turmoil, MyStonks revealed that its website had suffered a DDoS attack and received a large number of complaints and reports. At the same time, the funding activities of the rights protection users 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 the rights protection users have almost no substantial transactions; they withdraw their deposits within an hour after recharging, and these funds do not return to the original deposit address. Such operations naturally trigger risk control. Additionally, when a single transaction or cumulative funds exceed one million dollars, they may be subject to regulatory scrutiny. Meanwhile, MvStonks recently faced 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 is more inclined to view this incident as a business competition rather than merely a rights protection event.

According to @CryptoPainter_X, the person involved once shared their trading experiences in a group called Biyapay under the identity of "Uncle," stating that their account had a large amount of funds and expressing positive feedback about the platform experience. This screenshot was also retweeted by the official Biyapay account, and Biyapay directly competes with MyStonks in terms of business model. In his view, this seems like a premeditated act of commercial defamation, but there is currently no conclusive evidence.

The co-founder of Infini, @PrincessChristine, also stated that in the battlefield of business competition, there will always be some opponents who choose to use despicable means: first, they flood social media with negative information, 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 for revenge, but also to protect one's achievements and defend one's position.

Interestingly, after the MyStonks freezing incident, Biyapay not only emphasized the protective measures of multiple risk controls and fund isolation but also launched an asset migration reward program. Users can receive rewards if they use the MyStonks deposit address to complete any transaction on Biyapay. This move is interpreted within the industry as both an incentive and protection for users, encouraging the safe migration of funds, and is also seen as a market strategy against competitors.

In response to the public opinion turmoil on the internet, MyStonks stated that it is regrettable that there have been attempts to smear the platform's security and spread negative information under the guise of compliance and risk control. This is also an inevitable road for a new asset trading platform.