Telegram has refuted allegations by the US Securities and Exchanges Commission in court, which claim that the planned Gram token from the messaging app is a security and, therefore, subject to regulations from the commission and has requested that the trial be dismissed because of this.
Last month, the SEC successfully sought an injunction preventing Telegram from launching TON due to the fact that the ICO used to raise funds to develop the network was illegal. As a result of the injunction, investors in two separate ICOs were offered the chance to receive 77% of their initial investment back, but have instead decided to back Telegram’s blockchain plans and have accepted an extension on the launch of TON until April 30, 2020.
“[The SEC’s] claims are without merit as Telegram’s private placement to highly sophisticated, accredited investors was conducted pursuant to valid exemptions to registration under the federal securities laws and Grams will not be securities when they are created at the time of launch of the TON Blockchain,” said Telegram in the latest filing. However, the SEC has responded by warning Telegram and other issuers that they cannot escape federal securities laws by simply labeling their product as a cryptocurrency or digital token.
The messaging app did concede that it had not filed an official registration statement with the commission due to the fact that “none was, is or will be required under the federal securities laws,” and went on to accuse the federal body of engaging in “improper regulation by enforcement.” As a result, Telegram has requested that the Southern District Court of New York dismiss the claims made against it.
No resolution on the matter will be reached until next year at the earliest, with the next hearing scheduled for February 18 and 19. That hearing was due to take place last month but had been pushed back in order to allow both parties adequate time for discovery.
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