The Securities and Exchange Commission (SEC) believes that Telegram was not playing by the rules when it started selling GRAM tokens to finance the building of the Telegram Open Network (TON) blockchain. The financial regulator and the messaging platform continue to debate the technicalities of the multibillion-dollar sale, but the judge overseeing the case wants input from additional sources. Federal Judge Kevin P. Castel has reached out to another financial regulator, the Commodity Futures Trading Commission (CFTC), requesting that it provide its take on the subject.
According to an order signed by a judge, a copy of which is available on Scribd,“ The Office of General Coujnsel of the United States [Commodities] Futures Trading Commission is respectfully invited to express its views on the issues presently before the Court in [Case 1:10-cv-09439-PKC] in which its interests may be implicated. Leave is granted to file a written submission, which may take the form of a letter.”
The SEC believes that GRAMs cannot be commodities, as Telegram asserts, because “the value of that asset will have depended and will still depend on Telegram’s efforts to increase demand for and, thus, increase the value of that asset as purchasers reasonably expected and will expect.”
Telegram argues that it never made promises regarding the GRAM’s ability to produce dividends. However, the SEC counters that the value of the GRAM is solely dependent on the introduction and performance of the TON, which the commission determined makes it a security.
Whether or not having input by the CFTC is good news or bad news for Telegram will have to be seen. The regulator has said in the past that certain cryptocurrencies, such as Bitcoin, are commodities, not securities, and would, therefore, not be subject to certain SEC regulations. However, it hasn’t addressed the subject of token sales or the GRAM, specifically, which could affect how this case plays out. For the most part, while still ensuring that crypto companies adhere to the rules, the CFTC has been more flexible than the SEC when it comes to the blockchain space.
The first hearing for the ongoing dispute between the SEC and Telegram is coming up. Initially expected to take place on February 18, it has now been delayed a day by Judge Castel, who indicates that another trial is interfering with the schedule, forcing the change.
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