Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
In the latest post, the Blockchain Association opposed the SEC’s stand on blocking the launch of the Telegram Open Network. The Association has further criticized the regulatory for not maintaining clarity for a long time on blockchain and cryptocurrency rules.
The Chamber of Digital Commerce has filed amicus curiae supporting Telegram’s argument that “digital assets may be the subject of an investment contract without being a security”. Note that the amicus curiae is a specific type of litigation, however, it is not any sort of advice to the court.
The Blockchain Association has put a very straightforward stand in support of Telegram. In its Medium post, the Association wrote:
“The Blockchain Association’s brief opposes the SEC’s effort to block the launch of Telegram’s network. The Court should not block a long-planned, highly anticipated product launch by interfering with a contract between sophisticated private parties. Doing so would needlessly harm the investors that securities laws were designed to protect.”
The Blockchain Association further added that the blockchain and crypto companies have not received any clear guidance from the SEC. Thus, the Association argues that SEC’s litigation against Telegram makes the situation even more confusing. It states:
“The SEC’s lawsuit also raises novel questions regarding whether companies are forbidden from raising funds from sophisticated U.S. investors, under well-established regulatory provisions, to build blockchain networks.”
Holding SEC Responsible for Maintaining Ambiguity on Blockchain And Crypto Rules
Putting further a strong message and criticizing the agency, the Association wrote:
“Engaging with the SEC is extremely costly. Telegram discussed its plans with SEC staff for a year and a half, provided copious information and responded to limited feedback by adjusting the design of its transaction. Yet, at the end, the SEC has sued, and the SEC’s briefs thus far say nothing about the substance of those discussions.”
Last week, the SEC attorney Jorge Tenreiro claimed that Telegram conducted its GRAM (GRM) token sale in early 2018 just to pay for its servers. The SEC is now using this argument to further strengthen its case which claims that Telegram sold the GRAM tokens as unregistered securities.
Charging back, Telegram CEO Pavel Durov said that he remained transparent of using the raised funds for further development. He said that it is a known fact that Telegram is working on its TON Blockchain network.
The SEC, on the other hand, has cast doubts on Telegram GRAM development. In its latest filing to the Southern District of New York, the regulator has cast doubts on Telegram’s earlier motion. The filing document dated January 21, reads:
“Telegram Has Put Forth No Evidence Regarding the TON Blockchain’s State of Development at Launch. Telegram Marketed Few, if Any, Expected Uses for Grams.”
Besides, Telegram had also mentioned the use of GRM tokens in different applications. But the SEC has refuted it saying GRM token usage is not necessary for those apps.