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.
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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.
A filing from the US SEC has delayed #Telegram‘s cryptocurrency Gram, which raised $1.7 billion in a pre-sale in 2018.
There are high hopes for #Gram, which (pre-ruling) was predicted to bring in $4 billion in revenue by 2022.
— Business of Apps (@BusinessofApps) November 7, 2019