Telegram Asks for Dismissal of US SEC Lawsuit
Telegram denies the allegations of the US Securities and Exchange Commission, asking for a dismissal of all accusations.
Telegram has asked for a dismissal of the lawsuit against the US Securities and Exchange Commission, based on its response to the SEC filing. Telegram dismisses most accusations of selling GRAM tokens that constitute unregistered securities.
The Telegram ICO, which sold $1.7 billion’s worth of tokens, and never actually held a public sale, met a hitch as the SEC banned the launch of GRAM tokens on October 31. Thus, one of the most awaited assets is still not in circulation, barring slim derivative trading.
The Telegram Open Network, or TON (GRAM) token was supposed to serve as a utility asset. But the promise of rewards, plus the usage of the token for fundraising, put Telegram under the scope of the SEC.
One of Telegram’s arguments is that the ICO involved foreign purchasers, and the SEC has no jurisdiction over those forms of financing. As for any US buyers, Telegram claims private placements are exempt from oversight, unlike retail and mass offerings. For Telegram, the decision to issue an order to stop the token distribution was an even harsher blow in comparison to potential sanctions.
The SEC has persecuted multiple ICO projects. But for most lawsuits, the result was a fine, while the project continued to exist. In the case of Block.One, the SEC fined the company with just $24, a relatively small sum compared to the ICO haul.
Telegram also complains that the US SEC gave no signs of disapproval, and in fact encouraged token-based projects to try and launch while contacting the Commission for potential violations. The Telegram token launch was a prolonged process, which gave high hopes of a timely launch.
The GRAM token was also sold at a premium on international markets, at about $4 per token. If launched, GRAM would have been one of the first tokens based on a mainstream social media and communications product. For now, the launch has been delayed for an undetermined date in 2020.