Telegram was set to take on the U.S. Securities and Exchange Commission (SEC) in court this Thursday, but it now looks like it’s going to have to wait. The SEC is suing the communications platform over its introduction of the Telegram Open Network (TON) blockchain and attached Gram cryptocurrency, arguing that it was an illegal security, but the court date for the two sides to plead their cases has apparently been pushed back a while. This will give Telegram plenty of time to better prepare its defense.
According to court documents, the hearing that was going to take place on October 24 will now take place February 18-19, 2010. Judge P. Kevin Castel, who is presiding over the case, has ordered Telegram to not distribute any tokens before then or before the court makes its ruling.
Telegram has already delayed the launch of TON, initially scheduled for October 31, until the end of April of next year. It explained about the delay, “We had intended to launch the TON network in late October. However, the recent SEC lawsuit has made that timing unachievable. We disagree with the SEC’s legal position and intend to vigorously defend the lawsuit. We are proposing to extend the deadline date in order to provide additional time to resolve the SEC’s lawsuit and work with other governmental authorities in advance of the launch of the TON network.”
The SEC submitted an emergency action against the company on October 11 that prevented it from distributing any Gram tokens. Telegram had raised more than $1.7 billion from its initial coin offering (ICO) to launch the TON and the commission has asserted that it was an unregulated security. The company denied the allegation and added that it had been working with regulators throughout the entire process, calling the lawsuit essentially a witch hunt.
The delay was good news for Telegram and its investors. It said in a letter to investors on Saturday, “Telegram views this development as a positive step towards resolving this matter through the court system in an expeditious manner, and we and our advisers will be using the time to ensure that Telegram’s position is presented and supported as strongly as possible at the February hearing.”
It added, “The February hearing is different from the one previously scheduled for October 24, because in the February hearing Telegram anticipates asking the court to rule on the core argument that Grams are not securities. The October 24 hearing, in contrast, was only to consider whether a delay should have been mandated, without conclusively resolving the core argument.”
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