Telegram refutes SEC allegations and asks for a case dismissal

In a filing issued on Nov. 12, Telegram refuted the allegations made by the U.S. Securities and Exchange Commission (SEC) that $GRAM tokens are unregistered securities and, in the process, asked the district court of the Southern District of New York to dismiss the case. Specifically, Telegram took issue with the SEC’s lack of clear guidance as to what it considers a violation of the federal securities laws. The firm also relayed the claims were “without merit” as Telegram restricted GRAM investments to accredited investors.

Why it matters:

• The Telegram initial coin offering (ICO) is one of the first private token sales targeted by the SEC. All previous suits and settlements were issued against projects that accepted retail purchases. In this case, Telegram appears to have a legitimate gripe. The direction the SEC elects to go from here could set a precedent and impact other projects that raised funds via SAFTs from accredited investors.
• A case dismissal at this point is unlikely. Telegram will remain in regulatory limbo until its clash in court with the SEC on Feb. 18, 2020.