Telegram’s $1.7 Billion ‘Unlawful’ Token Issuance has been halted by SEC.

An emergency restraining order has been secured by the U.S. Securities and Exchange Commission (SEC) against the Telegram Group and its subsidiary TON Issuer for their $1.7 billion token sale.

An emergency action and restraining order restricting Telegram from selling or otherwise distributing its gram tokens within the U.S. The network was supposed to go live on Oct. 31 but the file order by SEC on Friday halted the launch.

According to reports, “Telegram sold 2.9 billion gram tokens “at discounted prices to 171 initial purchasers worldwide with more than 1 billion grams sold to U.S. investors inclusive”. Though it was alleged by the complainants that Telegram did not register its offer or sale.

It was said in a statement by SEC Division of Enforcement co-director Stephanie Avakian that the emergency action is  “intended to prevent flooding the U.S. markets with digital tokens that were unlawfully sold by message giant Telegram”.

However, Information about the gram token and Telegram’s own operations were not provided by Telegram to it’s investors, the investors were kept in the dark over Telegrams operations she said.

Furthermore, co-director Steven Peikin added that:
“Only by labelling their product a cryptocurrency or a digital token can not help issuers to escape the federal security laws and this has been stated repeatedly. The long-established disclosure responsibilities designed to protect the investing public needed to be complied with and Telegrams operation is not an exemption as they seek to obtain the benefits of this public offering without complying with the laws.”

Since over a year,Telegram has been on the development of its TON blockchain project and later with the rumours of its initial coin offering circulating in January 2018.

The messaging platform was looking forward to raise up to $600 million in a pre-sale and another $700 million through a public offering, according to sources close with the project who told Blockchainafrica.
In March 2018,Telegram claimed to raise $1.7 billion in a Form D disclosure filed with the SEC.

The company only published code for the network last month as everything about the project was shrewd in secrecy. Telegram did not even publicly confirm it was working on TON until this month, after it first emailed investors to confirm its late-October launch and then updated its terms and conditions.

A secondary market for the cryptocurrency has already exploded despite the fact that the gram token is yet to come live, with small crypto exchanges and OTC desks trading promises for tokens as soon as they are issued.

Crypto exchange Coinbase has announced custody support for gram tokens once they are issued.

On Friday the SEC’s emergency action came days after it settled with Block.One, the company behind the EOSIO project and EOS token. While Block.One raised $4 billion, the SEC only secured a $24 million fine, and will not require Block.One to register EOS as a security.

Meanwhile, Telegram could not be reached for comment immediately.

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Credits: Nikhilesh De

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