Filing an emergency action, the U.S. Securities and Exchange Commission (SEC) has obtained temporary restraining orders against Telegram and its subsidiary, the Telegram Open Network (TON).
The order accuses the two offshore companies of conducting an unregistered token sale starting in January of 2018.
“Defendants sold approximately 2.9 billion digital tokens called ‘Grams’ at discounted prices to 171 initial purchasers worldwide, including more than 1 billion Grams to 39 U.S. purchasers.
Telegram promised to deliver the Grams to the initial purchasers upon the launch of its blockchain by no later than October 31, 2019, at which time the purchasers and Telegram will be able to sell billions of Grams into U.S. markets.
The complaint alleges that defendants failed to register their offers and sales of Grams, which are securities, in violation of the registration provisions of the Securities Act of 1933.”
Co-director of the SEC’s Division of Enforcement, Stephanie Avakian, says the move is designed to stop Telegram from distributing its tokens to US citizens that invested in the token sale.
“Our emergency action today is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold.
We allege that the defendants have failed to provide investors with information regarding Grams and Telegram’s business operations, financial condition, risk factors, and management that the securities laws require.”
So far, Telegram has not responded to the SEC’s accusations.
The SEC recently hit Block.one, the creator of the cryptocurrency EOS, with a $24 million fine for holding an unregistered token sale.
Block.one has agreed to the settlement, and does not have to admit whether the company engaged in any wrongdoing.
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