Telegram responded to the SEC’s decision to consider Gram tokens illegal. The private messaging software creator claims that they’ve been trying to talk to the U.S. Securities and Exchange Commission for 18 months. “We are surprised and disappointed that the SEC chose the file the lawsuit”, Telegram stated according to The Block.
Last week the SEC sued Telegram and its subsidiary TON Issuer Inc. for allegedly selling unregistered securities last year. Telegram raised over 1.7 billion dollars to develop their Telegram Open Network blockchain. They were supposed to deliver Gram tokens to investors before October 31st.
Telegram is now ‘taking a break’ to receive more clarity on the legal status of the blockchain project. There will be a court hearing in New York on October 24th. Because of this court case, the launch of the TON blockchain might be delayed.
Telegram could receive a fine
It’s very likely that the SEC will fine Telegram for selling unregistered securities. In the first week of October both Nebulous and Block.One received similar fines from the Securities and Exchange Commission. These two companies had to pay 224 thousand dollars and 24 million dollars.
Based on these recent examples, it’s likely that Telegram needs to pay around 0.6 percent of its acquired money. In this case that would mean around 10.2 million dollars. After that the now illegal gram tokens will suddenly be registered securities and Telegram can continue its operation.
‘SEC is killing innovation’
In the past few months we’ve seen the SEC crackdown on a variety of crypto and blockchain projects. The Securities and Exchange Commission already started this last year. The organization first issued enforcement actions to companies that faked business relationships, or used celebrity testimonials.
It’s the Securities and Exchange Commission’s job to maintain a healthy climate for investors. The rise of new currencies and technologies hasn’t made their job any easier. This resulted in criticism from lawmakers and advisory groups.
For example there’s still no clear guidance on cryptocurrencies and investing in or with them. This existing legal framework in the United States is not good enough to cover ICOs and cryptocurrencies. In addition the SEC’s work is ‘killing transformative innovation‘ if they consider every cryptocurrency to be a security.
In April lawmakers introduced the Token Taxonomy Act which wants to exclude crypto from securities laws. The announcement called attention to the growing strength of crypto and blockchain markets in Europe and China. It was said that the Act is needed to keep the U.S. competitive in the global market.
Also published on Medium.