U.S. SEC Halts Telegram’s Token Launch This Month Calling its ‘Unlawful’
While messaging giant was all set to launch its native Gram (GRM) tokens in the crypto market, the U.S. SEC has just dropped a bomber to spoil the party. Last Friday, the SEC released an official statement asking Telegram to halt it token issuance process ahead this month.
As per the earlier plans, Telegram was all set to launch its Telegram Open Network (TON) blockchain along with its native cryptocurrency. However, the SEC has poured cold water on its plans by issuing a “restraining order” on Telegram’s token-launch process.
Last year in February 2019, Telegram sold nearly 2.9 billion Gram tokens to investors at a discounted price, as per the SEC filing. These tokens were sold to a total of 171 investors worldwide of which 39 were U.S. investors.
The SEC argues that Telegram did not register its offer or the sale thereby calling the sale to be ‘unlawful’ under the securities laws. The restraining order currently prevents Telegram from conducting its token issuance in the U.S.
Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement 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. 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.”
Soon after the SEC order, Telegram has informed its investors that there could be a possible delay in the token issuance process. In a letter to the investors accessed by U.Today, Telegram said that the company has always appraised the SEC regarding the TON network development over the last 18 months. The SEC order comes as a big surprise to the company and its developers.
The letter reads: “We were surprised and disappointed that the SEC chose to file the lawsuit under these circumstances, and we disagree with the SEC’s legal position. We are continuing to evaluate the best means by which to resolve the situation in the interests of relevant parties, including but not limited to assessing whether to seek to delay the launch date.”
The fate of Telegram’s TON network currently looks uncertain. If Telegram fails to convince the SEC on its token issuance, it will have to completely return its investors.