Lawyers for Telegram are once again pushing back against the US Securities and Exchange Commission (SEC). Today, they have responded to the SEC’s latest fling that opposed its request for clarity regarding the scope of the court’s decision barring the distribution of GRAM tokens.
The messaging platform filed a response to Judge Castel dated March 31, writing that the SEC’s injunction earlier today was unwarranted. Further, they are asking the federal court to deny the regulator’s motion to enforce a total ban, adding that Telegram’s request is not “procedurally barred.”
This was a response to the SEC’s letter, which referred to Telegram’s request for clarity as legally undeserving and procedurally barred.
“In fact, courts have modified injunctions after a request for clarification in similar circumstances. The modification of the injunction will preserve the status quo by clarifying for the parties precisely what [defendant] is, and is not, enjoined from . . . [and] is therefore within the scope of this court’s authority,” the statement further reads.
Telegram also argues that the SEC has never moved to strike its defense, citing the Supreme Court’s decision in the Morrison case, which provides foreign companies with a significant defense against claims made under the US federal securities laws.
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Telegram still seeks exemption for non-US investors
The filing explained that the SEC seeks to ‘improperly’ expand the geographic scope of local laws based only on the reasoning that its Gram token could be ultimately purchased by US buyers in the future. Further supporting its claims, the regulator said that once the Grams were delivered, the token buyers and Telegram itself would be able to sell billions of these tokens into the US through secondary market activity.
This goes against Supreme Court’s decision, Telegram claims, which clearly limits the authority of the US federal laws to apply only to “transactions in securities listed on domestic exchanges” and “domestic transactions in other securities.”
“That is simply a repackaging of the now-defunct “conducts and effects” test,” said Telegram, referencing the $1.7 billion it raised using a Simple Agreement for Future Tokens (SAFT) framework.
More importantly, Telegram still seeks the court’s order to be clarified to exclude the delivery of its Grams to non-US purchasers.
Telegram appealed the court on Friday, seeking clarity whether the preliminary injunction issued by Judge Kevin Castel held jurisdiction outside of the United States.