A United States District Court rules against Telegram
The Securities and Exchange Commission has received a court order issued by an opinion of a United States District Court to prevent the Telegram company from issuing its GRAM tokens.
Bad news for GRAM
The Securities and Exchange Commission has received a court order issued by an opinion of a United States District Court to prevent the Telegram company from issuing its GRAM tokens. In the ruling, the court stated that there would be an almost certain risk of future harm to investors. The trial of Telegram began in October of last year and finally GRAM will have to wait to be able to go to market.
Telegram argued at trial that the Gram token, issued through the ICO model, would become, after being updated, a commodity and would therefore be outside the scope of the SEC's application. However, the Court rejected this argument and ruled: "The Court rejects Telegram's characterization of the alleged security in this case. While useful as a shorthand reference, the value in this case is not simply Gram, which is little more than an alphanumeric cryptographic sequence. Howey refers to an investment contract ... consisting of the set of contracts, expectations, and understandings focused on the sale and distribution of Gram. Howey requires an examination of all of the understandings and expectations of the parts."
After the legal battles fought between Telegram and the SEC, the Court decides to agree with the Securities and Exchange Commission: "The Court considers that the Securities and Exchange Commission has shown that there is a high probability of success by showing that the contracts and understandings in question, including the sale of 2.9 billion Grams to 175 buyers for $ 1.7 billion, are part of a broader plan to distribute those Grams in a secondary public market, which would be supported by efforts in course taking into account the economic realities in the context of the Howey test, the Court considers that, in the context of that plan, the resale of the Grams in the secondary public market would be an integral part of the sale of securities without a mandatory registration statement."