Telegram must halt sale of its crypto token due to an SEC emergency restraining order

The US Securities and Exchange Commission officially instructed Telegram Group, the parent company of Telegram cryptographic messaging services, to officially discontinue the sale of cryptocurrency Gram. The SEC said it and its crypto-centric subsidiary TON Issuer Inc. did not sell $ 1.7 billion in crypto tokens early on before the blockchain network began on October 31. Because the SEC treats cryptocurrency as a security, Telegram says it violates the Securities Act.

“Our urgent action today is to prevent Telegram from flooding the US market with illegally sold digital tokens,” says Stephanie Avakian, SEC Executive Co-Head. "The defendant claims that he did not provide the investor with information about grams and telegrams' business operations, financial status, risks and management required for securities laws."

According to a document reviewed by The New York Times it is necessary to return the money collected by collecting tokens by October 31. According to the SEC, Gram's investors included 171 individuals and organizations around the world who bought 2.9 million tokens. One million of these tokens were purchased by 39 US buyers. But because Telegram did not register sales, it would have to break the law and raise $ 1.7 billion, the SEC said.

Telegram kept strangely quiet about the main details of the so-called TON network. The blockchain platform is designed to pair with a digital wallet that aims to provide a decentralized currency for everyone with a smartphone, like the Libra project that is struggling with Facebook.

However, the company officially acknowledged the existence of the network earlier this month with a letter to investors that revealed its official launch date, according to the crypto news website CoinDesk . Telegram declined to disclose key information about the project since it canceled its initial coin offering in May last year due to regulatory issues. Pre-sale of the tokens was later reported to have generated $ 1.7 billion, raising concerns that Telegram's network would appeal to money laundering and drug dealers due to lack of surveillance among regulatory oversight and security researchers.

SEC co-director Steven Peikin said, “Issuers have repeatedly said that simply displaying cryptocurrency or digital tokens on their products will circumvent federal securities laws. "Telegram wants to benefit from the public offering without complying with the long-standing public liability designed to protect the investing public."

SEC today filed a complaint in Manhattan's Federal District Court. Claim Telegram and TON Issuer for violating two registration provisions of the Securities Act. The agency seeks "a significant relief and a permanent restraining order, a departure from prior judgment, and a civil punishment."

Add a Comment

Your email address will not be published. Required fields are marked *