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Telegram denies all SEC allegations concerning its gram token and sale

Thu, 14 Nov 2019, 09:22 am UTC

Messaging giant Telegram has denied all the allegations made by the U.S. Securities and Exchange Commission (SEC) regarding its yet-to-release gram token and its sale in a new filing.

Last month, the SEC obtained an emergency restraining order against Telegram Group and its subsidiary TON Issuer Inc. alleging that the companies conducted an “unregistered, ongoing digital token offering” in the U.S. and overseas in which they raised over $1.7 billion.

The investors who participated in the gram token sale were initially supposed to receive the tokens on Oct. 31 with the launch of the TON blockchain. However, with the SEC case now in the picture, the launch date has been postponed to April 30, 2020.

In the latest filing to the district court of the Southern District of New York this week, the company has refuted all the allegations made by the regulator, with the exception of few basic details such as the nature of the company, the amount raised in the private placement and others, CoinDesk reported.

“[The SEC’s] claims are without merit as Telegram’s private placement to highly sophisticated, accredited investors was conducted pursuant to valid exemptions to registration under the federal securities laws and Grams will not be securities when they are created at the time of launch of the TON Blockchain,” said Telegram, adding that “Grams…will constitute a currency and/or commodity — not securities under the federal securities laws.”

Further admitting that it did not file any registration statement with the SEC, it said that this was because “none was, is or will be required under the federal securities laws.”

As in its previous filing, Telegram reiterated it voluntarily engaged with the SEC, seeking “meaningful guidance” in order to avoid any violations of the federal securities laws. It said that the regulator “failed to provide [guidance] prior to bringing this enforcement action.”

“[The SEC] has engaged in improper “regulation by enforcement” in this nascent area of the law, failed to provide clear guidance and fair notice of its views as to what conduct constitutes a violation of the federal securities laws, and has now adopted an ad hoc legal position that is contrary to judicial precedent and the publicly expressed views of its own high-ranking officials.”

Based on these arguments, Telegram has asked the court to deny the SEC’s claim to any relief and dismiss the claims against it “with prejudice and order such further relief as the Court deems just and proper.”

CoinDesk reported that the next hearing is slated for February 18-19.

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