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Telegram files a counter-argument in the US courts saying that its token Grams is not a security.
Telegram’s launch of its TON blockchain and GRAMS token has hit yet another brick wall because the United States Securities and Exchange Commission (SEC) has taken the issue of the launch of their tokens before a court.
In a filing two days ago, the messenger app organization asked the United States District Court for the Southern District of New York to deny the SEC the preliminary injunction. Just for reminder, the SEC had asked for it a filing of its own last week requesting Telegram to produce the appropriate documents.
Telegram’s argued in the filing that the Grams tokens are not securities. The messaging app also said that the SEC’s accusation runs counter to longstanding Supreme Court precedent, the SEC’s views relating to other cryptocurrencies, and common sense.”
The filing also indicates that Telegram has already agreed to stop the offering of its Grams token to the public until the legal issues can be settled by the court. The filing reads:
“As explained below, Telegram has agreed to stipulate that it will not make any offers, sales or deliveries of its expected cryptocurrency, called “Grams,” to maintain the status quo until this Court can resolve the legal issues at the heart of this matter”.
Telegram further told the court that it had worked with the SEC for months with thousands of pages of documentation preparing for its offering saying that it had taken a number of steps to convince the SEC.
The company said that they prepared thousands of pages of documents for the SEC, participated in three in-person presentations, engaged in email and telephone discussions regarding a wide range of topics relating to the TON Blockchain and Grams and made even modifications to the technology of TON in response to the SEC’s stated concerns. And it is even not the full list of its actions.
The crux of the matter is the fact that SEC had to wait this long until the eve of the deadline of the sale of its token to the public before filing the injunction. Also, the messaging app does not believe that its token is a security and has also said this as well in the filing.
Telegram further said in the filing that the SEC knew for 18 months that if TON didn’t launch by October 31, the funds invested must be returned to the private investors. Indicating also that there is the absence of an emergency, Telegram also noted that the SEC is pressing for “broad and burdensome emergency discovery.
The core of the argument for the messaging app is that the SEC’s theory about Grams being a security is flawed and is against the United States Supreme Court precedents. While this legal tussle may have thrown a spanner in the works for Telegram, it also indicates that the SEC can play hardball when the need arises and this will affect the adoption of cryptocurrencies and blockchain technology as a whole as regulation of cryptocurrencies has become unpredictable.
Sources indicate that Telegram has postponed the offering of its token till April 2020.