SEC Stops Telegram’s $1.7 Billion Token Sale

The US Securities and Exchange Commission filed an emergency action and obtained a temporary restraining order against the entities behind Telegram’s $1.7 billion token sale. This effectively prevents Telegram from selling or distributing its Gram tokens in the US.

According to the SEC complaint, Telegram sold approximately 2.9 billion Grams at discounted prices to 171 initial purchasers worldwide, including more than 1 billion Grams to 39 US purchasers. 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.

Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement, said, “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.”

According to the latest update, Telegram may delay the launch of its token which was scheduled for October 31st. The company has reportedly sent a note to investors saying that it is considering ways to resolve the matter, including the possibility of postponing the issuance.

Last week, Coinbase Custody had announced support for Telegram’s token. Incidentally, the SEC action comes just weeks after it settled with EOS parent Block.One for its unregistered securities sale.

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