The Strategist

US court sides with SEC, bans Telegram cryptocurrency release


03/25/2020 - 08:33



The New York State Southern District Federal Court recognized Gram digital tokens issued through the Telegram Open Network (TON) blockchain platform as a security and prohibited their transfer to investors, thereby taking the side of the Securities and Exchange Commission (SEC). This is stated in a preliminary court decision published on March 24.



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Having appealed to the court last October, the commission asked to ban the transfer of Gram tokens to the first investors. The SEC insisted that it was a security, but its issue and sale to investors in 2018 took place without prior registration, as prescribed by the US securities law. The court agreed with the SEC, citing in its decision the Howie test - the criteria developed by the US Supreme Court in 1946 to classify transactions as investment contracts. In particular, in the court’s opinion, the first TON investors were invested hoping to earn through a sale in the secondary market. Telegram, in the course of the debate, failed to present convincing arguments indicating that there was no need to pre-register before the sale of tokens to the first investors, the court indicates.

The blockchain platform TON, which provided for the issuance of the internal Gram cryptocurrency, raised $ 1.7 billion at the beginning of 2018. Investors, in turn, acquired 2.9 million Gram digital tokens out of 5 million planned for release. The launch of the platform was supposed to take place at the end of October last year, but due to the proceedings initiated by the SEC, Telegram offered investors a delay in April. Most of them gave their consent.

Telegram may appeal the preliminary court decision.

source: cointelegraph.com




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