Telegram vs. the SEC: SEC Counters, TON Hearing Postponed Until 2020
This post was originally published on the Telefuel blog. Telefuel is the new Telegram client for power users and professionals. Learn more and download Telefuel for free at www.Telefuel.com.
It’s been an exciting week for Telegram, to say the least. In case you missed it, here’s the background and our previous coverage:
- On Friday, October 11, 2019, the SEC filed an emergency action against Telegram.
- On Thursday, October 17 Telegram filed their official response.
Our coverage left off there, and in the days since, there’s been a flurry of activity with responses and statements from the SEC, the Court, and Telegram.
Here’s the latest.
Thursday, October 17 — SEC Responds to Telegram
In response to Telegram’s October 17 reply, the SEC filed an official 5-page letter with the court, reaffirming their claims that Telegram violated securities law, and that a preliminary injunction would be necessary to prevent further violations.
In the response, the SEC reiterates that, despite Telegram’s claims that “Grams will merely be a currency or commodity” (as opposed to a security), Telegram’s 2018 token sale was in violation of securities law because:
- “…Whatever [Telegram] contend Grams “will… be” at some future date says nothing about what Grams were in 2018 when Defendants offered and sold them without a registration statement….”, and
- “With respect to whatever Grams were in 2018…. Telegram’s mere assertion that “Grams ‘will be’ a ‘currency’ does nothing to cure the prior violation of the law.
The SEC’s response goes on to defend their discovery requests against Telegram’s claims that the requests are overly burdonsome, and concludes by essentially restating their prior stances and requests from earlier filings.
Thursday, October 17 — Court responds
Later on Thursday, October 17, the US District Court for the Southern District of New York filed a brief response, recognizing the merits of both the SEC and Telegram’s arguments:
The response continues suggesting the parties discuss collaborating on a few points:
- Resolving the scope & timing of discovery
- Reaching an agreement on a negotiated standstill
- Advancing the trial on the merits and consolidating it with the preliminary injunction hearing, and
- An exchange of listing of any witnesses it intends to call at a preliminary injunction hearing, including a schedule for direct testimony by affidavit.
Friday, October 18 — NY District Court Postpones TON Hearing to 2020
On Friday, October 18, the Court filed an official postponement of the TON Hearing to February 18 and 19, 2020.
With the filing, the Court affirmed that Telegram agrees to not offer, sell, deliver, or distribute any Gram tokens, and includes a list of orders that the SEC and Telegram should comply with in advance of the Hearing, including details around discovery and expected witnesses.
Saturday, October 19 — Telegram Writes Investors
On Saturday, October 19, CoinTelegraph reports that Telegram sent a letter to investors, framing the rescheduled Hearing as “a positive step”:
“Telegram views this development as a positive step towards resolving this matter through the court system in an expeditious manner, and we and our advisers will be using the time to ensure that Telegram’s position is presented and supported as strongly as possible at the February hearing.
Telegram goes on to explain that the postponed hearing will be more conclusive around the core debate of Grams as securities or currency:
”The February hearing is different from the one previously scheduled for October 24, because in the February hearing Telegram anticipates asking the court to rule on the core argument that Grams are not securities. The October 24 hearing, in contrast, was only to consider whether a delay should have been mandated, without conclusively resolving the core argument.”
For more coverage and analysis, we can recommend Henry Linver’s coverage at CoinTelegraph:
As always, we’ll continue to follow the story as updates emerge (though it’s likely updates will be slower now until closer to the February 18–19 hearing).
That said, SEC trial aside, we’ll be publishing more Telegram & crypto-industry related news in the coming weeks. Feel free to subscribe using the links below to follow along.
Originally published at https://www.telefuel.com. Telefuel is the new Telegram client for power users and professionals. Learn more and download Telefuel for free at www.Telefuel.com.
