The SEC is still pursuing a lawsuit against Telegram over the Gram token offering, in which the committee has been opposing the blockchain and related tokens of the messaging service.
In a lengthy filing to the Southern District of New York, the SEC responded to Telegram’s previous motion. In particular, the SEC has taken the opposite position against TON, Telegram’s blockchain, as well as the Gram (GRM) token.
The SEC is skeptical about what Telegram offered
Telegram hosted an ICO in 2018, ran two phases of private investment, and raised $ 1.7 billion. In 2019, the SEC began an investigation of Telegram’s efforts, claiming that the entity did not register for the ICO and the Gram token with the committee.
According to recent court records, Telegram has stated cases of using GRM tokens in certain applications. However, the document also points out that using GRM is not a necessity in those applications.
Besides, Telegram provides a chart that lists the use of GRM, applications, etc. Even so, the SEC noted some skepticism about the company’s chart. The SEC believes that the Telegram chart does not distinguish any potential applications that have been developed or are in the process of being developed. Besides, there is no direct, reliable evidence on file regarding the nature or status of any potential application listed in Telegram’s chart.
Court documents list many other question marks regarding GRM token use, as well as all Telegram offers, suggesting that the SEC has many concerns over this issue, and there is currently no solution.
Blockchain Association expressed support for Telegram
The Blockchain Association has submitted a summary of amicus curiae in response to the lawsuit against Telegram initiated by the SEC.
On Jan. 21, Blockchain Association, a collective of advocates related to the blockchain industry, filed an amicus curiae summary with the Southern District of New York.
(An ‘amine curiae’ is an entity that is not involved in a particular lawsuit but has the right to advise the court on certain legal issues directly related to the lawsuit.)
In the letter, the association raised doubts about the fees the SEC had set for Telegram in October 2019. At the time, the regulator sought to prevent Telegram from transferring its original token, GRM, to early investors. The SEC states that the upcoming Telegram and GRM form an unregistered offering.
The SEC did not provide clarity on their interpretation of whether and when digital assets are securities, the association argued in the letter. Therefore, a court’s decision about whether Gram is a security at the time of the deal could have consequences across the industry.
Read more:
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