US SEC deals another massive blow to Telegram’s crypto
- The US SEC's conflict with Telegram progresses further, as Telegram recently requested clarification.
- The SEC responded that the injunction applies to every person or entity, preventing the project.
- While this is a massive blow to Telegram's project, it is likely still not the end of the conflict.
The US Securities and Exchange Commission (SEC) still remains in conflict with the messaging app, Telegram. The two were in conflict ever since the SEC banned Telegram’s ICO, claiming that it was not registered. As such, it does not comply with the US regulations, which has posed a huge barrier to the project’s progress.
The situation further developed on March 24th, when the court sided with the regulator, and granted an injunction against issuing GRAM tokens.
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Then, on March 27th, Telegram’s lawyers decided to try a new approach to resolving the situation. They filed a letter, requesting that the court clarifies if the injunction has jurisdiction outside of the US. The SEC then responded by sending a letter to Judge Castel yesterday, March 30th.
The letter claims that the injunction is to be applied: “unambiguously, and properly, applies to Telegram’s delivery of Grams to ‘any person or entity’ […] and requires no clarification.” In other words, Telegram no longer has the option to simply choose not to distribute its coins in the US. Its GRAM token is now banned from distribution anywhere in the world, which is a huge blow to the company.
Telegram cannot distribute its tokens to any person or entity
As many may remember, Telegram held an ICO in 2018, raising $1.7 billion during the coin offering. The funds were then used for the development of the token and the launch of the project’s ecosystem, TON (Telegram Open Network).
However, as mentioned, the US SEC stopped Telegram’s progress. It claimed that the project sold unregistered securities. It then forbade it from distributing its tokens. These are the same tokens that correspond to the company’s $1.7 billion ICO.
Over time, the Supreme Court recognized a ‘presumption against extraterritorial application’ of the US securities laws. Telegram addressed this in its letter filed on March 27th. It stated that it seeks to distribute the tokens to its existing Investors However, it is now banned from doing so. It cannot deliver Grams to “any person or entity or taking any other steps to effect any unregistered offer or sale of Grams,” as the SEC put it. The SEC also added that, while Telegram filed a ‘request for clarity,’ this was actually a disguised motion for reconsideration of the court’s decision.