- Telegram refused to follow an SEC order requiring it to provide information on the GRAM ICO that raised more than $1.7 billion.
- Telegram refused to provide information on investors related to the ICO.
The case of the Securities and Exchange Commission (SEC) against Telegram keeps getting more complicated. The regulator made a move that will further delay the launch of Telegram’s token, known as GRAM. The company remains unwilling to cooperate with the U.S. regulator on an alleged ICO issued on an unregistered security.
SEC blocks the way for the approval
The Telegram token is one of the cryptocurrency projects that seek to be launched by a private entity. The GRAM will be launched on the Telegram blockchain, known as TON (Telegram Open Network). However, the United States regulator has prevented the project from progressing.
As reported by CNF, the SEC began blocking GRAM’s trail in October 2019. At that time, the SEC issued a temporary restraining order against Telegram Group Inc. and its subsidiary TON Issuer. The regulator ordered the company to stop issuing its ICO on GRAMs that sought to raise funds to finance the development of TON.
The regulator claims that the ICO is a security that was not registered under U.S. law. Therefore, its issuance is illegal. Telegram responded to the SEC’s accusations by delaying the launch of GRAM by April 30, 2020.
Investors in the GRAM-based ICO agreed to postpone the launch date. The SEC continued its investigation and legal action against Telegram for the ICO that allegedly raised $1.7 billion.
In November, a judge in the Castel District Court of the Southern District of New York ordered Telegram founder Pavel Durov to make an affidavit in front of the court. Durov and other Telegram executives were summoned to appear on December 16 of last year.
Telegram ignores SEC requests
Despite the demands of the United States legal authorities and the regulatory body, Telegram has remained uncooperative with the investigation.
For this reason, the SEC has had to go to foreign institutions to request their cooperation. Last year, they petitioned the High Court of England to obtain the testimony of John Hyman, a former Morgan Stanley investor. Hyman was supposed to be able to give information about the ICO on the GRAM token.
A new document filed with the court indicates that the SEC’s efforts to obtain information about the ICO have been unsuccessful. In addition, it was learned that Telegram refused to provide any financial information about the proceeds of the ICO. The regulatory body stated the following:
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Defendants now refuse to disclose bank records relating to how they have spent the $1.7 billion they collected from investors over the past two years and to answer questions about the disposition of investor funds.
The case continues without the parties reaching a settlement. Besides the ICO, another point of interest for Telegram is to demonstrate that GRAM is a currency or a commodity and not a security, according to U.S. law. If it can prove this, the SEC’s allegations would be invalid.