The Simple Agreement for Future Tokens (SAFT) sale offered by Telegram a couple of years ago has turned out to be anything but simple. The social media platform, which became the main communications channel for many in the cryptocurrency space because of its increased security features, has repeatedly come under fire ever since, including being banned in certain countries. In the U.S., it is in the midst of a never-ending battle with the Securities and Exchange Commission (SEC) and the fight doesn’t appear to be abating. The SEC is trying to increase its control over Telegram’s actions, but the company refuses to give in.
The SEC has accused Telegram of offering an illegal sale of securities through its Gram SAFT offering. However, Telegram has responded by saying that the Gram is not a security and, therefore, not subject to securities’ laws. Through the SAFT sale, Telegram collected $1.7 billion from 171 investors.
The two sides are still locking horns and Telegram is being sued by the SEC over the illegal sale. Telegram has repeatedly refused to turn over data and the SEC’s most recent request is for the company to hand over financial information related to how it has spent any of the money collected from the sale. In a filing with the court this week, the SEC states, “Defendants are now refusing to disclose the bank records concerning how they have spent the $1.7 billion they raised from investors in the past two years and to answer questions about the disposition of investor funds.”
To that request, Telegram simply says no, according to Finance Magnates. The company has previously stated in court that the “[SEC’s] claims are without merit as Telegram’s private placement to highly sophisticated, accredited investors was conducted pursuant to valid exemptions to registration under the federal securities laws and Grams will not be securities when they are created at the time of launch of the TON Blockchain.” As a result, any subsequent request for information will meet the same response.
Gram was provided in order for Telegram to build out its Telegram Open Network. It was expected to be introduced in October 2019, but the ongoing litigation with the SEC is forcing Telegram to dedicate its resources to the legal fight and the company hasn’t provided an update for a new possible launch date. However, it continues to assert that “if and when” it launches the Gram tokens, “they will constitute a currency and/or commodity – not securities under the federal securities laws.”
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