Federal judge denies Telegram’s request to distribute tokens to non-US investors

A federal judge has rejected Telegram’s request to carry out the distribution of GRAMs to non-US investors, stating the company failed to explain how it could effectively fence off US investors or “lawfully modify” the sales agreements. The decision comes less than a week after the same judge ordered Telegram to refrain from issuing GRAMs, the native asset of the TON blockchain, later this month, claiming the current distribution plan violates securities laws.

This event is just the latest stage in the prolonged court battle between the US Securities and Exchange Commission and Telegram.

Why it matters:

• While not unexpected, the ruling marks another significant setback in Telegram’s effort to launch the TON blockchain. Telegram is not out of legal moves just yet, as it appealed the order banning the issuance of GRAMs earlier this week. But it is looking likely the company won’t receive the legal clearance to hold up its end of the token sale agreements, which would allow investors to recoup their initial investments.
• Crypto-focused attorney Gabriel Shapiro said the judge displayed “admirable technological savvy and skepticism.” Gabriel specifically pointed to the judge’s ability to recognize that US investors could circumvent Telegram’s offer to geo-block participation because the code for TON is open-source.