Home News Telegram $1.7 Billion ICO Stopped: SEC Takes Emergency Action via Temporary Restraining...

Telegram $1.7 Billion ICO Stopped: SEC Takes Emergency Action via Temporary Restraining Order

TL;DR: On the same day the US Securities and Exchange Commission (SEC) joined a statement with two other leading regulatory agencies warning about the illicit use of cryptocurrencies, the SEC fired off a solo announcement, explaining “it has filed an emergency action and obtained temporary restraining order against two offshore entities conducting an alleged unregistered, ongoing digital token offering in the U.S. and overseas that has raised more than $1.7 billion of investor funds.”

SEC Takes Emergency Action Against Telegram ICO

Telegram “began raising capital in January 2018 to finance the companies’ business, including the development of their own blockchain, the ‘Telegram Open Network’ or ‘TON Blockchain,’ as well as the mobile messaging application Telegram Messenger,” the complaint presser reads. “Defendants sold approximately 2.9 billion digital tokens called “Grams” at discounted prices to 171 initial purchasers worldwide, including more than 1 billion Grams to 39 U.S. purchasers,” the SEC insisted.

The Telegram “promise” is to distribute Grams (GRM) to investors by the end this month, allowing the token to be sold at will. The SEC “alleges [Telegram] failed to register their offers and sales of Grams, which are securities, in violation of the registration provisions of the Securities Act of 1933,” and the resulting sale would basically flood the US market with Grams, the agency contended.

Emergency Action
At press time, CEO and co-founder Pavel Durov has not issued a statement on the SEC’s actions.

Telegram is an encrypted messaging service very popular with cryptocurrency enthusiasts, and its dovetail into tokenization seemed more than a perfect fit. Indeed, just this week, US exchange arm Coinbase Custody posted it would support “the secure storage of GRM” as of its launch. And with something close to a quarter-billion users around the world, all of its financial moves are no doubt watched carefully by regulators, especially in the United States. The company, however, is domiciled in the United Kingdom and effectively operates from Dubai, United Arab Emirates. Exactly how much impact today’s SEC halting will have on the eventual ICO rollout is unclear.

“The SEC’s complaint, filed today in federal district court in Manhattan, charges both defendants with violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act, and seeks certain emergency relief, as well as permanent injunctions, disgorgement with prejudgment interest, and civil penalties,” the agency stressed. As of publication, Telegram has not commented on today’s SEC actions. The New York Times’ crypto-journalist Nathaniel Popper mused, “The SEC’s move to shut down Telegram’s crypto project raises questions about the big venture capital firms that gave it $1.7 billion and convinced themselves that it would pass regulatory muster. That includes Benchmark, Sequoia and Lightspeed.”

Emergency Action

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