The conflict between the SEC and Telegram continues over the launch of its ICO
Telegram's initial coin offer (ICO), Gram, was rated by the SEC as an offer of unregistered value and legal proceedings against the courier company.
Telegram vs. SEC
On October 11, 2019, the United States Securities and Exchange Commission (SEC) filed an action demanding the cessation of the initial GRAM currency offer of the tech giant Telegram. According to the SEC, the sale of Gram tokens is an unregistered securities offer. Telegram responded by arguing that the offer had been directed only to "accredited investors", so the Gram token qualified under the exemptions of Regulation D and therefore does not require the same degree of regulatory protection as the offers addressed to investors of the main Street.
The SEC requested on January 2, 2020 a court order to force the Telegram company to disclose information on all expenses incurred with the funds raised in its initial coin offer (ICO). In the presentation, the SEC explains: “The requested bank records are highly relevant to the issues in dispute in this case, including how much money Telegram has spent, and how, in the development of the TON Blockchain, the Telegram Messaging application to be integrated with the Blockchain TON, and related applications.”
Telegram's lawyers responded with a letter to Judge Castel saying: "On behalf of the Defendants, we write in opposition to the motion of the letter presented by (the SEC), seeking to force the production of bulky and highly sensitive bank records that they have little or no relation to the claims and defenses in this action and would impose undue burdens on the accused.”
The decision of the court
The court ruled in favor of Telegram but forced the company to prove that its bank records do not violate foreign data privacy laws. The court order resolves that: "The Court denies, without prejudice, the request of the plaintiff to force the disclosure of the defendant's bank records. By January 9, 2020, the defendant must establish in a statement a proposed timeline for a review of the bank records requested to ensure that the production of such records complies with foreign data privacy laws."
In court of the Southern District of New York (SDNY) has issued a ruling today that will allow Telegram to write the information provided to the court in accordance with foreign privacy rules, filing a maximum period of February 26. Defense attorneys reported that Telegram will provide all bank records to the SEC on January 15.