US court left a ban on Telegram’s cryptocurrency
U.S. regulators sued a company that raised $1.7 billion through a cryptocurrency offering that became one of the largest such deals ever. The Securities and Exchange Commission on Friday said it obtained a legal order to halt Telegram Group Inc. from distributing its crypto asset, known as gram. Telegram is popular with cryptocurrency traders and developers all over the world.
In New York (USA), the Federal Court postponed the suit of the American stock exchange regulator against Telegram until February. In addition, judge Kevin Castel upheld Telegram’s temporary ban on the launch of the Gram cryptocurrency and the TON blockchain platform.
American regulators sue crypto startup over initial coin offering
The meeting is going to be on 18-19 February 2020. Earlier, Telegram company together with Pavel Durov stated that they agreed to postpone operations on Gram cryptocurrency and blockchain platform TON until the trial in the USA is over.
At the same time, Telegram considered the interim injunction unnecessary and tried to challenge it but to no avail. Earlier, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Telegram Group Inc. In connection with the ICO, as a result of which the company raised $1.7 billion.
According to the commission’s statement, the company failed to properly register the placement of Gram’s cryptocurrency, thereby violating the U.S. securities law. The agency demands that the court acknowledge the violation, impose penalties on Telegram Group. Its branch TON Issuer and recover the funds received by them in favor of the state.
Telegram has huge challenges right now
At the same time, Telegram challenges the characterization of its products as “securities” on which the SEC relies. It also intends to refute this position of the regulator in court.
The long-awaited launch of Gram’s own cryptocurrency and TON blockchain platform in Pavel Durov’s Telegram Messenger will not take place. The U.S. Securities and Exchange Commission (SEC) has obtained a temporary injunction against two Telegram offshore companies that allegedly placed Gram tokens (units) in the U.S. and abroad.
The SEC suspected that the business model was not transparent. Its official representative Stephanie Avagyan stated that the commission’s actions prevent the flooding of the American market with tokens. According to the SEC, this was not legal from the very beginning.
Gram tokens investing
According to the SEC complaint, the companies Telegram Group and TON Issuer Inc. sold about 2.9 billion digital tokens of Gram to 171 buyers around the world as part of a closed placement. 39 investors from the USA purchased one billion tokens. It turns out that Durov has already collected $1.7 billion in investments to create his own blockchain platform TON. The platform had to launch by October 31, 2019.
But after the decision of the SEC, Durov’s project should return the money to investors. Telegram representatives have the opportunity to appeal until October 24. They have already announced their readiness to postpone the launch of TON until the end of April 2020. Thus, the company will have five months to settle the issues, but most investors and, of course, the SEC must agree to this.
Official tries to save Telegram cryptocurrency
Durov promised investors to return “about 77 percent” of their investment right now if they do not agree to wait. However, those who have invested are hardly ready to lose their money so quickly. Durov’s risky asset was originally the most courageous investor. They will not stop supporting the project so easily. Especially since the SEC has no real tools to close down Telegram and prevent the technological launch of TON. Durov is just trying to do everything officially.
Quarreling with the U.S. regulator, in the long run, is unprofitable. This could theoretically lead to a ban on Telegram in the U.S., the exclusion from the Apple Store and Google Play with all the resulting. The SEC’s precedent is already in place. Earlier this year, the commission reacted in this way to the launch of several other crypto projects. In particular, after long disputes, the settlement agreement concluded with the American project Block.one. It is not clear whether Durov will agree to the agreement, but he seems to have no other way.
(Featured image by Christian Wiediger)
First published in expert, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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