The authorities behind the Telegram app and its $1.7 billion ICO were hit recently by an emergency action and restraining order by SEC for failing to register its Gram token as a security.
The United States Securities and Exchange Commission (SEC) is supposedly saying that the firms underneath Telegram and its initial coin offering have been working on an unregistered securities offering. The initial start of raising capital for Telegram begun in January last year to build their own blockchain, the Telegram Open Network also known as the TON blockchain.
In fact, to date, the cloud-based instant messaging software has sold just shy of $3 billion Gram tokens to 171 purchases on an international scale, with more than a third of those tokens, worth some $590 million, going to around forty United States investors according to the release.
The software even promised to deliver said Gram tokens on the launch of its blockchain. This would be no later than the 31st of October this year. Following this, Telegram would “sell billions of Grams into U.S. markets.”
The complaint made by the securities commission claims that the bodies behind the Telegram software didn’t register their offer and sale of the Gram token, “which are securities, in violation of the registration provisions of the Securities Act of 1933.”
The co-director of the SEC’s division of enforcement, Steven Peikin spoke on the action and stated:
“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.”
It will be interesting to see how this situation plays out. For more news on this and other crypto updates, keep it with CryptoDaily!