SEC stops GRAM and issues temporary restraining order against Telegram

  • The US Securities and Exchange Commission has issued a temporary restraining order against Telegram. 
  • The agency has formally instructed Telegram to stop selling its cryptocurrency GRAM.

In a press release issued yesterday, the US Securities and Exchange Commission (SEC) announced that the agency has issued an emergency action and temporary restraining order against the Telegram Group Inc. and its subsidiary TON Issuer. Both companies are responsible for Telegram’s Initial Coin Offering. They are being accused of “making an unregistered, digital token offer in the USA and abroad”.

The sale of Gram Token to private investors has raised more than $1.7 billion for the development of the Telegram Open Network (TON). According to the SEC, however, the GRAM token is a security that should have been approved under the US Securities Act of 1933. As a result, the SEC has formally ordered Telegram to cease selling its Gram cryptocurrency.

The SEC says that both companies failed to register the GRAM token as a security prior to the launch of the ICO. Stephanie Avakian, co-director of the SEC’s Division of Enforcement, also stated in the press release that both companies have failed, in the SEC’s view, to provide investors with comprehensive information about Telegram’s business:

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.

Steven Peikin, Co-Director of the SEC Division of Enforcement, added:

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.

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According to the SEC, the initial investors (in the two non-public rounds) worldwide include 171 individuals and organizations that have purchased 2.9 million tokens. One million of these tokens were purchased by 39 US buyers. Telegram has said that it would deliver the tokens to the buyers by 31 October 2019 and that the buyers could sell them on the market by then.

Binance Research has recently published a study on the Telegram Open Network (TON), in which Binance expressed doubts as to whether TON could meet the high expectations of a “5th generation” blockchain. As Binance stated, the potential is enormous. However, the current state of development, beyond technical whitepapers, is questionable.

CEX.IO prepares for integration of TON

The cryptocurrency exchange CEX.IO has recently announced that it is preparing the integration of the GRAM token regardless of the news. Considering the expectations of the TON project, the CEX.IO team is doing everything in its power to make the Gram token available for trading as quickly as possible (freely translated):

While the entire industry is holding its breath and waiting for the official release, CEX.IO is already on the path to becoming one of the first exchanges to support Gram, the official coin of the Telegram Open Network. CEX.IO engineers are currently modeling the integration and making sure everything is prepared for the listing by the launch of the mainnet.

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About Author

Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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