Recently, a platform called Mystonks, which claims to offer "U.S. stocks on-chain," has sparked widespread controversy for freezing user funds. According to reports, the platform withheld a large amount of assets on the grounds of "non-compliant user fund sources."

From a financial compliance perspective, this approach is highly unusual. A standard financial institution, upon identifying suspicious funds, would typically refuse receipt, return the funds, and file a report with regulators. The platform's direct "withholding" of assets casts serious doubt on its claimed "compliance."

Mystonks has long touted its U.S. MSB license and compliant STO issuance as its core selling points. But what is the truth behind these so-called "compliant" credentials? The author conducted an investigation.

1. The Truth About "Compliant STOs": Registration ≠ Approval, Private Placement ≠ Public Offering

During the investigation, the author found that Mystonks' claims were not entirely baseless. The U.S. Securities and Exchange Commission (SEC) public database does indeed contain filing information for Mystonks Holding LLC.

The key points of this document (Form D) are as follows:

• Filing type: Private placement exemption under Regulation D 506(c).

• Target investors: Limited to "accredited investors."

• Offering size: $575,000, with a minimum investment threshold of $50,000.

This document is precisely the crux of the issue and the most misleading aspect of the platform's marketing.

First, Form D is a notice filing, not an operating license. It merely indicates that the company has informed the SEC of a private placement offering. The SEC only archives it and does not conduct any review or endorsement of the company's qualifications or project authenticity.

Second, and most importantly, the filing strictly limits the target investors. Regulation D is an exemption designed for private placements, targeting a small group of qualified wealthy individuals or institutional investors (i.e., "accredited investors"). However, Mystonks, as a publicly accessible trading platform, clearly serves a user base that largely does not meet this standard.

Thus, Mystonks' actions can be understood as: using a filing document intended for small-scale fundraising from a select group of wealthy individuals to publicly engage in securities trading activities that require strict licensing.

This practice essentially exploits ordinary investors' unfamiliarity with U.S. securities regulations to conflate concepts. To legally offer security token trading services to the public, a platform needs higher-tier licenses like ATS (Alternative Trading System) or Broker-Dealer, which are worlds apart from a simple Form D filing.

2. The Misused MSB License: An "Anti-Money Laundering" Filing Unrelated to Fund Safety

After discussing the relatively complex STO, let’s turn to the more commonly used marketing tool—the U.S. MSB license.

Regarding the MSB license, investors need to understand one core fact: its value and significance have been severely exaggerated by many projects in the market.

The MSB (Money Services Business) is regulated by FinCEN, a bureau under the U.S. Department of the Treasury, with its core responsibility being anti-money laundering (AML). In other words, FinCEN only cares whether platforms report suspicious transactions to combat financial crimes. It does not oversee user fund safety, review business models, or assess technical capabilities.

More importantly, the MSB application threshold is extremely low. Through intermediaries, registration can be easily completed overseas without even requiring a physical office in the U.S. This makes it the go-to tool for many projects to quickly and cheaply "package" themselves as compliant.

When a platform primarily serving non-U.S. users repeatedly emphasizes its MSB license, investors should recognize that this is more of a marketing tactic than proof of strong financial capabilities.

Conclusion: Understanding the "Compliance" Playbook of Such Platforms Through Mystonks

Mystonks is not an isolated case. It clearly reveals the "compliance" packaging tactics commonly used by platforms operating in gray areas. Across the market, numerous exchanges and financial platforms follow similar scripts, and investors need to be acutely aware of this.

The typical playbook of such platforms can be summarized as follows:

1. Step 1: Use the MSB license as a marketing "door opener." Leverage its "U.S. government" association and low acquisition cost to quickly establish a basic, seemingly credible image.

2. Step 2: Misinterpret securities filings through "conceptual substitution." Package a limited, strictly conditioned filing (e.g., a private placement filing) as a comprehensive operating license for public services, exploiting information asymmetry to mislead deeply.

3. Step 3: Engage in "precision marketing" using geographical and legal disparities. Knowing their operations cannot legally operate in the U.S., they target overseas users unfamiliar with U.S. regulations, creating a "blooming abroad while unnoticed at home" scenario.

As investors, we should learn from these tactics. When judging whether a platform is truly compliant, remember two fundamental principles:

• True compliance is expensive and tangible. It entails high licensing fees, deposits, physical office rents, and local legal team costs. "Compliance" that is easily obtained and intangible is inevitably cheap in value.

• True compliance is transparent and specific. It dares to clearly disclose license types, numbers, regulatory scopes, and restrictions. Vague, generalized claims of "compliance" often crumble under scrutiny.

In investment decisions, reduce the term "compliance" from a marketing buzzword to a legal fact that must be rigorously examined. Only by holding this line can we best protect our asset safety.