Telegram Asks for Dismissal of SEC Allegations

by Arnab Shome
  • The company already delayed the launch of Gram until next April.
Telegram Asks for Dismissal of SEC Allegations
Reuters

Telegram, the company behind the issuance of the Gram token, has requested the New York Southern District Court to dismiss the charges brought against it by the Securities and Exchange Commission (SEC).

The US regulator alleged that the encrypted messaging company violated the country’s securities law by distributing unregistered tokens that fall under the category of security. Notably, the platform raised $1.7 billion from private investors in two rounds of the token sale.

The appeal was made by the defendant in an updated court filing dated November 12.

“Plaintiff has engaged in improper ‘Regulation by enforcement’ in this nascent area of the law, failed to provide clear guidance and fair notice of its views as to what conduct constitutes a violation of the federal securities laws, and has now adopted an ad hoc legal position that is contrary to judicial precedent and the publicly expressed views of its own high-ranking officials,” the filing stated.

Delay in the launch

Though the token sale was conducted last year, the market watchdog dragged the company to court last month, less than a month before the scheduled distribution of the tokens to its investors.

While raising funds, the company guaranteed the investors to launch its Blockchain before October 30, 2019; else, they will be eligible for a refund. The lawsuit, however, forced the company to suspend its blockchain launch, at least for the time being.

Despite the regulatory pressure, Gram investors refused to opt for a refund for their investment and allowed the company to delay the launch until April next year. In return, the company will invest another $80 million in its blockchain project.

Telegram, the company behind the issuance of the Gram token, has requested the New York Southern District Court to dismiss the charges brought against it by the Securities and Exchange Commission (SEC).

The US regulator alleged that the encrypted messaging company violated the country’s securities law by distributing unregistered tokens that fall under the category of security. Notably, the platform raised $1.7 billion from private investors in two rounds of the token sale.

The appeal was made by the defendant in an updated court filing dated November 12.

“Plaintiff has engaged in improper ‘Regulation by enforcement’ in this nascent area of the law, failed to provide clear guidance and fair notice of its views as to what conduct constitutes a violation of the federal securities laws, and has now adopted an ad hoc legal position that is contrary to judicial precedent and the publicly expressed views of its own high-ranking officials,” the filing stated.

Delay in the launch

Though the token sale was conducted last year, the market watchdog dragged the company to court last month, less than a month before the scheduled distribution of the tokens to its investors.

While raising funds, the company guaranteed the investors to launch its Blockchain before October 30, 2019; else, they will be eligible for a refund. The lawsuit, however, forced the company to suspend its blockchain launch, at least for the time being.

Despite the regulatory pressure, Gram investors refused to opt for a refund for their investment and allowed the company to delay the launch until April next year. In return, the company will invest another $80 million in its blockchain project.

About the Author: Arnab Shome
Arnab Shome
  • 6303 Articles
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About the Author: Arnab Shome
Arnab is an electronics engineer-turned-financial editor. He entered the industry covering the cryptocurrency market for Finance Magnates and later expanded his reach to forex as well. He is passionate about the changing regulatory landscape on financial markets and keenly follows the disruptions in the industry with new-age technologies.
  • 6303 Articles
  • 80 Followers

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