Topic: SEC vs Telegram Group Inc (Read 412 times)

It's now official, Telegram losses the case against SEC and the judge issued a $18.5 million civil penalty against them, and should be settled within 30 days after entry of the final judgement Here is the official documents:

https://www.courtlistener.com/docket/16325310/241/securities-and-exchange-commission-v-telegram-group-inc/

One thing though, it looks like they spin everything to look likes they are the victim here and blame everyone, including the system but themselves.

It's toast. Telegram have announced that they have thrown in the towel - https://techcrunch.com/2020/05/12/telegram-abandons-its-ton-blockchain-platform/

It looks like they're pinning its demise entirely on the legal meddling they experienced from the US.

For the last 2,5 years some of our best engineers have been working on a next-generation blockchain platform called TON and a cryptocurrency we were going to name Gram. TON was designed to share the principles of decentralization pioneered by Bitcoin and Ethereum, but to be vastly superior to them in speed and scalability.

We were very proud with the result – the technology we created allowed for an open, free, decentralized exchange of value and ideas. When integrated with Telegram, TON had the potential to revolutionize how people store and transfer funds and information.

Unfortunately, a US court stopped TON from happening. How? Imagine that several people put their money together to build a gold mine – and to later split the gold that comes out of it. Then a judge comes and tells the mine builders: "Many people invested in the gold mine because they were looking for profits. And they didn't want that gold for themselves, they wanted to sell it to other people. Because of this, you are not allowed to give them the gold."

If this doesn't make sense to you, you are not alone – but this is exactly what happened with TON (the mine), its investors, and Grams (the gold). A judge used this reasoning to rule that people should not be allowed to buy or sell Grams like they can buy or sell Bitcoins.

Perhaps even more paradoxically, the US court declared that Grams couldn't be distributed not only in the United States, but globally. Why? Because, it said, a US citizen might find some way of accessing the TON platform after it launched. So, to prevent this, Grams shouldn’t be allowed to be distributed anywhere in the world – even if every other country on the planet seemed to be perfectly fine with TON.

This court decision implies that other countries don’t have the sovereignty to decide what is good and what is bad for their own citizens. If the US suddenly decided to ban coffee and demanded coffee shops in Italy be closed because some American might go there – we doubt anyone would agree.

And yet, despite that, we have made the difficult decision not to proceed with TON.

Sadly, the US judge is right about one thing: we, the people outside the US, can vote for our presidents and elect our parliaments, but we are still dependent on the United States when it comes to finance and technology (luckily not coffee). The US can use its control over the dollar and the global financial system to shut down any bank or bank account in the world. It can use its control over Apple and Google to remove apps from the App Store and Google Play. So yes, it is true that other countries do not have full sovereignty over what to allow on their territory. Unfortunately, we – the 96% of the world’s population living elsewhere – are dependent on decision makers elected by the 4% living in the US.

This may change in the future. But today, we are in a vicious circle: you can’t bring more balance to an overly centralized world exactly because it’s so centralized. We did try though. We're leaving it to the the next generations of entrepreneurs and developers to pick up the banner and learn from our mistakes.

I am writing this post to officially announce that Telegram’s active involvement with TON is over. You may see – or may have already seen – sites using my name or the Telegram brand or the "TON" abbreviation to promote their projects. Don’t trust them with your money or data. No present or past member of our team is involved with any of these projects. While networks based on the technology we built for TON may appear, we won’t have any affiliation with them and are unlikely to ever support them in any way. So be careful, and don’t let anyone mislead you.

I want to conclude this post by wishing luck to all those striving for decentralization, balance and equality in the world. You are fighting the right battle. This battle may well be the most important battle of our generation. We hope that you succeed where we have failed.

You bet the funds have already been used up, if not for direct operations, then for litigation costs. Does anyone know if the crypto raised was stored as crypto (in original currency of raise) or if it was liquidated for fixed fiat amount? I keep seeing numbers floating around in fiat.

Also, I think investors who say they're deceived are being slightly irresponsible. You know it's a security just by looking at the token. Tokens don't change what they do overnight. Neither do definitions.

Of course, after the SEC ruling, Telegram has no options but to give a refund to their investors otherwise they might get sued as well and it won't look on their name and as business entity. And it also seems to be that they have deceived their US investors by not telling that they are indeed a security token. So now the ball is on their court and the only option for them is to really comply with the decision.

They can at list start thinking a better strategy to make refunds to all investors since this is already looking like a dead end, once the court already ruled in favour of the sec, and term the token as security rather than utility that already does it, they already made the mistake of not be clear with their tokens in the first place.

Given the growth of Telegrams, they will be faster in the top. Moreover, after the introduction of their own cryptocurrency, they break ahead with a huge margin!

What can the SEC or US courts under these circumstances? Can they force US companies such as Amazon (AWS) and Google (GCP) to stop doing business with Telegram which pays for their services?

Another potential option could be the removal of American investors from the project, according to Barinsky, but "this may be followed by lawsuits from other investors."

Barinsky told TASS that the team of Durov could now register a transaction, recognizing that gram is a security. "To conduct an IPO, but in this case, the launch of the project will be postponed for another period, companies usually prepare for this for at least a year," he said, adding that it was "practically impossible" to do this before April 30, 2020.

^^ Obviously, this is bound to happened, Telegram will lose its battle against SEC here.

Do they even think that they can get away with it? Although they are not based on US, but offering it to US securities will likely get them the attention from SEC and this is what occurred here. They failed the Howey Test, so I don't know how they will keep on fighting this one.

The Court finds that the SEC has shown a substantial likelihood of success in proving that  the contracts and understandings at issue, including the sale of 2.9 billion Grams to 175 purchasers in exchange for $1.7 billion, are part of a larger scheme to distribute those Grams into  a  secondary  public  market,  which  would  be  supported  by  Telegram’s   ongoing  efforts.     Considering the economic realities under the Howey test, the Court finds that, in the context of that scheme, the resale of Grams into the secondary public market would be an integral part of the sale of securities without a required registration statement.

So if SEC insist pushing that grams are security tokens but the Gram stipulated on their platform that their tokens served as a utility on their telegram network then they are lying to us? Then if that's the case they arent allowed to list it on major exchanges such as liquid and okex since there are none regulations yet set for security tokens that allowed them to formally listed on market. I know some security tokens but their provisions arent tight unlike this one.

The results of the filed case might not favor gram if such accusation is proven and discussed by authority. I am looking forward what action gram will take on this matter.

I am sure that the outcome of this case will have bigger and far-reaching repercussions to the whole cryptocurrency industry as this can be the basis of future judiciary decisions on defining whether a token can be security or not. Telegram has the best opportunity to present all the legal arguments before the court that SEC is wrong on its conclusion that GRAM is a security token and therefore Telegram made legal mistakes in introducing such a digital asset to the public. Honestly, however, I am seeing that eventually the two sides on this legal maneuvering will be settling on a compromise.

New documents filed by SEC in New York with additional details, stating the GRAM is indeed a security token. Even citing Shyam Parekh, a Telegram employee who told an accountant that "that the unnamed investor has the right to 72,835,916.68 Gram tokens". A bit messy to be honest, but let's see how Telegram will respond with all the allegations here.

Rule 56.1 Statement — Document #80
District Court, S.D. New York

Docket Number: 1:19-cv-09439-PKC

Date Filed: January 15th, 2020