More

    Telegram’s GRAM Token Issuance Halted As US Court Grants SEC Injunction Request

    A U.S Court judge made a preliminary ruling in favor of the Securities Exchange Commission (SEC) injunction to stop Telegram from offering the GRAM tokens come April. While the ruling is not final, it raises doubts on whether Telegram will be able to offer the tokens to their investors amidst the upcoming April 30 deadline.

    Court offers injunction against GRAM token issuance

    In a preliminary injunction ruling by Kevin Castel, U.S Southern District of New York judge, dated March 24th, Telegram will halt its planned GRAM token issuance after finding the action will violate the U.S Securities law.

    In 2018, Telegram raised a public offering topping $1.7 billion in exchange for close to 3 billion GRAM tokens. However, the courts determined the company will be conducting an illegal securities offering if the tokens are disbursed under current conditions established by the “Howey Test”. The official report states,

    “Considering the economic realities under the Howey test, in the context of that scheme, the resale of Grams into the secondary public market would be an integral part of the sale of securities without a required registration statement.”

    Telegram argues that the offering entails two separate transactions; the first is the offers and sales on the “interest in GRAMs” which amounts to a security and the other will be the “delivery of the GRAM tokens to the initial purchasers once the TON blockchain launches.”

    However, the court argues that reasonable purchasers would not be willing to pay $1.7 billion to acquire GRAM tokens for their utility on TON blockchain. It further states,

    “Instead, Telegram developed a scheme to maximize the amount initial purchasers would be willing to pay Telegram by creating a structure to allow these purchasers to maximize the value they receive upon resale in the public markets.”

    The final preliminary hearing on Telegram case

    With these reasons, the court ruled that the distribution of GRAMs to the initial investors will amount to offering a security that would be unlawful given Telegram did not follow the due process outlined in the Securities Act. It reads,

    “The Court also finds that the delivery of Grams to the Initial Purchasers, who would resell them into the public market, represents a near certain risk of a future harm, namely the completion of a public distribution of a security without a registration statement.”

    This, however, does not mean the end of GRAM issuance, as Telegram can take the case to appellate judges. But the possibility of the injunction being rules into a permanent injunction rules-heavy at the moment and sets Telegram in a tight spot to return the investors’ money if no GRAMs are offered by April 30.

    You can read the full 44 page document here:

    Get Free Email Updates!

    *Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

    I will never give away, trade or sell your email address. You can unsubscribe at any time.

    Lujan Odera
    Lujan Odera
    Lujan is a blockchain technology and cryptocurrency author and editor. He has worked in the field of cryptocurrencies and blockchain technology since 2015 helping him gain enough experience to be the writer he is today. He is known for his simple writing style that allows novices to understand the field in the simplest way.

    [Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

    [Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here

    3,354FansLike
    2,773FollowersFollow
    4,134FollowersFollow

    Live Bitcoin Price & Latest BTC Charts

    Today's Latest Crypto News

    Crypto Exchange Binance Looks To Join Houbi, OKEx In Launching A Mining Pool

    Top crypto exchange Binance has plans to launch its own mining pool, according to a Russian crypto news outlet Coinlife on Tuesday. The news was...

    Coinbase Custody Moves Tezos (XTZ) Staking Bakery From US to Ireland For Regulatory Reasons

    Coinbase has managed to move the Tezos Staking Bakery, the largest validator since its launch in 2019 which the exchange has been operating since...

    BitMEX’s Operator HDR Global Grants $100k Towards Bitcoin Core Development

    BitMEX’s parent company HDR Global Trading Limited has awarded $100k to the Bitcoin core developer Michael Ford. This will be the second grant towards...

    Bitcoin, Ethereum, DogeCoin, Lightning Network's Code to be Buried Under Arctic Ice

    The Bitcoin codebase snapshot will be encoded onto film and afterwards be stored for 1,000 years under ice, in Svalbard, Norway. The move is included...

    Huobi Wallet to Integrate Crypto Lender Cred Allowing Users To Earn Interest

    The crypto exchange offering wallet services Huobi has closed a partnership with the decentralized crypto lending company Cred in order to offer user's interest...

    BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.