Telegram’s legal team had its plans laid out while waiting to hear how a federal judge might rule in its fight with the U.S. Securities and Exchange Commission (SEC) over whether or not the Gram digital token is a security as the SEC claims. When District Judge P. Kevin Castel handed down his decision this past Tuesday and said that the token was more than likely a security, and called for Telegram to halt any more token sales, the legal team jumped in, immediately entering an appeal of the ruling.
Castel forced a temporary injunction on Telegram as had been requested by the SEC. He determined that, per the Howey Test, Grams could be considered securities, and that Telegram hadn’t properly filed with the SEC to offer the product. That decision led to Telegram’s lawyers filing their appeal almost as soon as the ink was dry on Castel’s ruling. The legal team says in its filing, Notice is hereby given that Defendants Telegram Group Inc. and TON Issuer Inc (“Defendants”) hereby appeal to the United States Court of Appeals for the Second Circuit, pursuant to 28 U.S.C. § 1292(a)(1), from the decision and order entered on March 24, 2020, granting Plaintiff Security and Exchange Commission’s motion for a preliminary injunction.”
As has been seen on numerous occasions, Telegram’s chances of winning its appeal are slim. The SEC has a solid, almost perfect, track record in its litigation against companies that offered digital currency sales without proper authorization, and doesn’t have a lot of legal precedent on its side to win the battle. The SEC is convinced that almost all digital assets are securities, with only very few exceptions, and has repeatedly received court support for its view.
While the company continues its fight with the SEC, it is having to perform PR damage control elsewhere. While it’s difficult to monitor all the activity that happens on a social media platform, it isn’t completely impossible, and some people are not amused with Telegram for allowing an international sex ring to run rampant on the platform.
At the center of the scandal is a South Korean national who was just found guilty of using Telegram to run different sex chat rooms on the app. This led to the individual, identified as Cho Ju-bin, to coerce women to send him pornographic pictures and video. He would then blackmail the individuals by threatening to release the material if they didn’t pay him, but he released it, anyway. He reportedly had a distribution list on Telegram consisting of up to 260,000 subscribers, all of whom were paying to view the content. He was found to have sexually abused 74 women, of which 16 were underage, and an investigation is now underway to try to identify the individuals who had purchased the material.
Similar illicit activity has been uncovered operating in the digital currency space before, and investigators didn’t have a lot of difficulty uncovering the individuals behind the wallet addresses. As this latest case unfolds, computer forensics specialists probably won’t have too much difficulty discovering who was involved.
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