Telegram’s attorneys might be sweating a little bit extra as a recent filing by the U.S. Securities and Exchange Commission (SEC) teases how strong the regulator’s case may be. The SEC has requested assistance by the High Court of Wales and England to compel former Chief Investment Advisor John Hyman to testify.
The SEC request was filed in the U.S. District Court of the Southern District of New York on December 6. In it, they request the U.K. court to help force Hyman into testifying against his former company, something he’s so far been unwilling to do. He currently works at Gram Vault, a custodian for the largest investors of Telegram’s Gram digital asset.
The SEC alleges Telegram illegally offered an unregistered security to investors, going against U.S. law, and argues that Telegram marketed it as such. Telegram disputes this finding, arguing that it did not offer a security at all.
The new request by the SEC builds the case for why Telegram is not telling the whole truth, and how Hyman proves it. In one email listed in the filing, Hyman indicates Telegram knew what it was doing was wrong, suggesting the company “decided for regulatory reasons that we will never do any form of direct public offering, … the public will be able to buy grams once network is working … not from Telegram directly.”
The SEC also builds its case that grams were securities, and Telegram always knew as much. “Telegram’s marketing materials reasonably led purchasers of Grams to view them as an investment into a common enterprise from which they could hope to profit based on Telegram’s efforts to develop a business,” the SEC wrote. Following that marketing, investors “acquired substantial quantities of Grams that would far exceed any purported use of the Grams in whatever ecosystem Telegram promised in the future.”
Hyman was apparently well aware of this. Although early investors were forbidden from selling their grams on secondary markets, secondary markets popped up and Hyman was looking into them. “Hi Stan have you seen any grey market gram activity if so at what prices,” Hyman wrote to one investor, apparently named Stan.
The filing also indicated the SEC has plenty of Telegram’s email history in hand, including emails between CEO Pavel Durov and potential 2018 investors, possibly including actor Jared Leto.
Should Hyman be forced to testify, this would be the second major blow to Telegram in as many weeks. At the end of November 2019, District Court Judge P. Kevin Castel ordered Durov and other leaders of the company to provide depositions, with Durov’s coming in early January 2020.
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