I

n about two weeks, the “gram” token was set to be launched by Telegram. The plan was a massively supported project. Telegram was able to raise $1.7 billion USD in two ICOs and has since then been surrounded by massive hype. Now just weeks from the launch date those plans might be derailed.

The U.S. Securities and Exchange Commission (SEC) said it, “has filed an emergency action and obtained temporary restraining order against two offshore entities conducting an alleged unregistered, ongoing digital token offering in the U.S. and overseas.”

Essentially, the SEC is saying that Telegram Group and a subsidiary group know as TON Issuer Inc. conducted an illegal sale of unregistered securities in the U.S. Over 2.9 billion tokens (known as “Grams”) sold worldwide for approximately 1.7 billion and 425 million worth was sold in the U.S. According to the SEC, this was illegal as these securities were not registered in compliance with the Securities Act of 1933.

Photo by Christian Wiediger on Unsplash

Co-Director of the SEC’s Division of Enforcement, Stephanie Avakian said, “Our emergency action today is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold,” she continued,  “We allege that the defendants have failed to provide investors with information regarding Grams and Telegram’s business operations, financial condition, risk factors, and management that the securities laws require.”

Telegram however has told investors it has been in talks with the SEC for about a year and a half and said, “we were surprised and disappointed that the SEC chose to file the lawsuit under these circumstances.”

However, according to Steven Peikin, Co-Director of the SEC’s Division of Enforcement, ““We have repeatedly stated that issuers cannot avoid the federal securities laws just by labeling their product a cryptocurrency or a digital token.”

“Telegram seeks to obtain the benefits of a public offering without complying with the long-established disclosure responsibilities designed to protect the investing public.”

If Telegram can pass the SEC there are many positive outlooks for the messaging app.

Photo by Christian Wiediger on Unsplash

Telegram is a rising platform and some of its statistics are really impressive:

⦁ 200 million Telegram monthly users, as of March 2018

⦁ 365 million lifetime downloads of Telegram, as of August 2019

⦁ July 2019 saw a 323% year-on-year increase in first-time Telegram installs in Hong Kong, during pro-democracy protests; the first week of August saw 41,000 new users (100% up on the first week of June 2019)

⦁ The official Telegram News channel has highest average post reach, with 1.6 million (September 2019)

⦁ A year following the ICO, Gram may have appreciated by as much as 200% (offered at $4 in July 2019)

The future of the Gram isn't clear, but at current state the SEC "seeks certain emergency relief, as well as permanent injunctions, disgorgement with prejudgment interest, and civil penalties."

There is no defined amount for the penalties, and the next steps for the SEC are to conduct an investigation in regards to the claims against them. While this story will not diminish the hype surrounding Telegram's token. All eyes and ears will be focused on the promised release date of October 31st, a delay at this time is only speculation.

Updated on
October 15, 2019
 in 
Regulation
 category

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