News Portals now and then keep publishing of Telegram issue with SEC, you might be wondering what is that, so we have brought all the info to you in this article. so let’s learn of the matter. while all of us know what is SEC and telegram but for newbies, here is the intro of both.
SEC (U.S. Securities and Exchange Commission)
U.S. Securities and Exchange Commission is an independent federal government agency that is mainly responsible for maintaining fair and orderly performance of functions in the securities market, thus protecting investors. SEC oversees orderly facilitation of capital formation.
Telegram Group Inc.
Telegram Inc. and it’s subsidiary company TON Issuer Inc. is a messaging company service that offers a cloud-based desktop and mobile messaging application. Security and encryption are also provided. Their service is an ideal way to send and receive messages, files and multimedia. They are widely popular after WhatsApp.
Present Tussle of Telegram Token and SEC
Telegram announced its plan to hold an ICO starting on 31 Oct 2019 for sale of its cryptocurrency token Gram. SEC has officially asked the Telegram Group to halt sales of Gram, as it failed to comply with the regulations and rules imposed upon everyone in the industry by the SEC. SEC classifies Gram as security and wants it to follow the same rule as all other securities follow. SEC has described their emergency action as a preventive measure aimed at averting Telegram from adding digital tokens in the U.S. market that they think will be sold via multiple channels to everyone.
Conflict Explained in simple terms
SEC asked the Telegram Company to register its sale of tokens by 31st October. As SEC regards tokens as a form of security, it must be registered. Telegram, on the other hand, doesn’t deem its Token Gram as security and is reluctant to register accordingly.
Here is How events unfolded:
January 2018: Telegram Group Company started working on raising its capital for financing company’s business. The company’s Blockchain network “TON” (Telegram Open Network) was also to be financed under this program. Telegram named its token as Gram.
January 2018 to October 2019:Defendants sold appx 2.9 billion tokens to 171 purchasers in private sale round which they started in January 2018. A billion grams were sold to US purchasers, which meant that these digital tokens would be added to the US market after the formal launch of the TON that was dated 31st October.
11 October 2019: SEC has alleged that Telegram did not register the offers and sales of their tokens, so their existence within the market is unlawful. Furthermore, SEC alleged that Telegram Group failed to provide any information to the purchasers about the digital token, such as details of Telegram’s business operations, risk factors, financial conditions and types of management which the securities laws require. So, SEC has officially ordered the Telegram Group to halt the sale of its cryptocurrency Gram. SEC had explicitly said that the company fails to make the distribution of its first batch; it will give back its raised money back. However, the company also never registered the sales, so it violated the securities act thus SEC Emergency Restraining Order appeared. Now, SEC says it might take telegram’s raised 1.7 Billion.
Reaction of Telegram Group Inc.:
Telegram Group has long remained silent upon the details of the case. Now after SEC move of restraining order it has approached a Federal district court of New York in this regard detailing that Gram is not a security. Telegram is also willing to halt its sale of Gram until the matter is settled out.
Now, it is to be seen how the matter will unfold further in the SEC and telegram’s tussle. This matter is important as its result will provide further clarity on Initial Coin Offerings and regulatory status.