According to a court order dated Wednesday, encrypted messaging app Telegram has agreed to disclose financial documents and answer the SEC’s questions that should shed more light on the disposition of investor funds.
The decision comes after months of back and forth where Telegram’s lawyers previously requested that the application be thrown out, calling it an “unfounded fishing expedition.” The legal battle also included the same judge informing the Securities and Exchange Commission that it would not be given full access to Telegram ICO’s banking and financial details.
In its letter to the court, Telegram said it would hand over to the SEC information regarding tokens distributed to initial investors in Grams, as well as the funds it collected from those first buyers. On top of this, it will deliver all final written agreements, communications, and any amendments pertaining to its token sale agreements, including those related to the termination of such contracts.
Evidence of post-ICO sales
These documents, the agency hopes, will demonstrate how much Telegram has spent from the funds it collected in two token sales conducted in early 2018.
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In addition, Telegram will reveal the details of its offers to investors as part of the sale of Gram tokens, which ultimately allowed the App owners to raise $1.7 billion from accredited investors, many of whom US citizens.
Although the agency claimed that the information was central to its investigation of Telegram’s ICO, the judge limited the scope of the documents the messaging app must produce.
Telegram argued earlier that its bank records comply with foreign data privacy laws, but the SEC renewed its request and stated that “Telegram does not even mention the names of the foreign countries whose laws might apply, nor does it cite any specific data privacy laws.”
Further supporting its request, the SEC said it obtained evidence of post-ICO sales, which undercuts the argument that the token sale was exempt from registration requirements. The US regulator said Gram tokens were sold after completing its ICO, and two companies already invoiced Telegram for commissions from selling the Grams, months after the controversial initial coin offering concluded.