Telegram token injunction covers ‘any person or entity’: SEC

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The U.S. Securities and Exchange Commission (SEC) has said that the injunction against messaging app Telegram preventing the distribution of its proprietary token applies to “any individual or entity” receiving Gram tokens.

The comments follow the regulator rejecting a bid from Telegram for clarity over the scope of the injunction, with the messaging app appealing for clarifications on the geographic extent of the limitations imposed by the court order.

In a written response to Judge Castel published this week, the SEC said the injunction “unambiguously, and properly, applies to Telegram’s delivery of Grams to ‘any person or entity’ […] and requires no clarification.”

The Gram token was set to be delivered to those that backed Telegram’s $1.7 billion ICO in 2018, which the firm had said would fund the launch of its new Telegram Open Network, or TON.

Last week, lawyers for Telegram wrote to the court enquiring about the geographic parameters of the March 24 injunction, and specifically over whether the order had legal effect beyond the United States.

Some $1.27 billion of the funds raised in the ICO were derived from investors outside of the U.S., and the application sought clarity on whether the relevant laws were being applied extraterritorially.

In the letter, Telegram pointed to precedent suggesting “a ‘presumption against extraterritorial applications’ of the U.S. securities laws.”

Describing the letter as “really a motion for reconsideration in disguise,” the SEC said the injunction prevented Telegram from “delivering Grams to any person or entity or taking any other steps to effect any unregistered offer or sale of Grams.”

Daniel Perez, the head of TON Spain said the network could still launch in spite of the injunction, because the project is open source, with at least two different test networks already up and running.

“No one can prevent the launch of TON by any other entity, person or a community, [be]cause TON is a decentralized open-source solution. Already, there are two different test networks, and within the community, there is at least 1 group planning to launch the third.”