Telegram Asks for Dismissal of SEC Allegations

The company already delayed the launch of Gram until next April.

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.

London Summit 2019 Launches the Latest Era in FX and Fintech – Join Now

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.

Suggested articles

Pure Markets' CEO Talks Business Model, 2020 OutlookGo to article >>

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.

Got a news tip? Let Us Know