Telegram Disputes All Claims By the SEC, Requests Court to Discharge Litigation

Telegram has filed an appeal to the US court, asking them to discharge the litigation made by the Securities and Exchange Commission which claims that its unreleased token is a security.

In Telegram’s address to the court on the 12th of November, the firm explained and disputed all the statements made by the SEC in its litigation filed a month ago. Although they didn’t disclose some fundamental details of the enterprise.

The SEC obtained a restraining order against Telegram and its subsidiary that was creating the TON blockchain network against the $1.7 billion sales of Gram tokens on the 11th of October.

However, the Gram tokens are yet to be released to investors and won’t be until the scheduled release date (31st of October) which has been further postponed due to the SEC’s prosecution.

Telegram’s Request
According to Telegram’s appeal, the SEC’s litigation lacks credence as Telegram’s distribution of tokens was allotted only to sophisticated and accredited investors which complies with the federal securities laws and that Gram tokens when released, will not be classified as securities.

The firm also indicated that the SEC did not properly go about regulating this relatively new sector of the law. They claim that the SEC did not procure adequate direction and prescription of what it considers as an infringement of the federal securities laws and has taken actions that are contradictory to its judicial norm.

The firm also noted that it willingly met with the SEC to seek directions to operate in line with the federal securities laws. Still, the SEC reneged on providing this direction before carrying out this legal action.

The firm, once again, emphasized that its Gram tokens haven’t been manufactured and that when they are, it will be classified as a currency or commodity and not a security.

Telegram admitted to not filing an enrollment declaration with the SEC stating that there was no need or requirement for that based on the federal securities laws.

With that, the firm requested that the court throw out the litigation by the SEC with prejudice as the court considers fair.

The firm has postponed the release of TON blockchain and Gram until the issue has been addressed.

SEC Restricts Telegram from Tokenizing

The United States Securities and Exchange Commission has disclosed its intention to sue two establishments, Telegram and TON, for the possession of unregistered coin exchange.

In the filing documented against Telegram in the Federal District Court in Manhattan, the organization declares that Telegram made sales of about 2.9 billion cryptocurrency coins (GRM) to an aggregate of one hundred and seventy-one patrons for $1.7 billion. About $424.5 million of that amount is alleged to belong to thirty-one U.S. citizens.

Consequently, the organization has procured an interim restraining order barring the company and its blockchain, TON from dropping an ICO. The regulatory authority is aspiring to gain “certain emergency relief”, also, to procure lasting sanctions. This new development has caused the company to reconsider the preliminary debut period of TON which was set on the 31st of October.

Trouble for TON’s $1.7 Billion Listing?
The issue relating to the TON coin trade started when the biggest possessor of the GRM coin, Gram Asia, began trading the holding to its GRM possession in collaboration with Japan-based cryptocurrency exchange, Liquid, at $4 for a coin, thereby multiplying the prior price of $1.33.

The exchange of TON tokens violated the set investment agreement. As stated by the contract, buyers were requested to not sell the holding rights before the release. This has caused the organization to step in, days before the debut of TON, with a restraining order, stopping the listing.

The organization’s complaint declares that Telegram failed to report the exchange of the GRM, which is regarded as a security by the SEC.

The Securities Act of 1993 which specifies that every security is enlisted with the organization, which has caused the organization to consider the exchange of the GRM found as “unlawful”.

However, based on reports, Telegram notified the organization that its $850 million ICOs were formulated based on Rule 506(c) and Regulation S under the Securities Act of 1993. This implies that since the GRM coins were traded solely to accredited investors, there was no requirement for the product to be enlisted with the organization.