Judge Denies Telegram's Appeal to Issue Grams to Non-US Entities, Says it's Too Late to Question SEC Jurisdiction
Lucas Cacioli Apr 02, 2020 09:00
US Federal Judge P. Kevin Castel has denied Telegram’s request to issue its Gram tokens to overseas investors.
US Federal Judge P. Kevin Castel has denied Telegram’s request to issue its Gram tokens to overseas investors.
Telegram had filed an appeal to last week’s ruling by a United Stated federal court in favour of the US Securities and Exchange Commission (SEC) which is prohibiting the issuance of Gram tokens for the time being.
In the most recent turn in Telegram’s six-month court battle with the U.S. Securities and Exchange Commission (SEC) over the legal status of the former’s $1.7 billion Gram token offering in 2018, the US courts have ruled that the injunction barring Telegram from issuing its Gram tokens is applicable to all potential investors both in the United State and overseas.
Courts Continue to Side with SEC
In Telegram’s notice of appeal with the Court of Appeals for the Second Circuit, the company cited the SEC’s lack of jurisdiction with overseas investors and even made the suggestion that it would implement safe-guards to protect against “non-US Private Placement purchasers reselling Grams to US purchasers in the future.”
Judge Castel argued that Telegram had not provided enough evidence that it could implement these types of safeguards and cited that, “the TON Blockchain was designed and is intended to grant anonymity to those who purchase or sell Grams,” meaning that the proposed safeguard would be unenforceable in the real-world.
The order also points out that the question of the SEC’s jurisdiction has not been previously raised by Telegram, and said at this point it is too late to consider it.
Will TCF Launch TON without Telegram?
As the picture is starting to look very grim for the launch of the Telegram Open Network (TON), some in the TON Community Foundation came forward with contingency alternatives on March 26: notably their ability to launch with or without the messaging platform’s further participation and without regulator approval.
As the US Courts appear to be siding with regulators, granting a temporary halt on Gram distribution; the TON Community Foundation’s founder, Fedor Skuratov said that the community is seriously considering options like launching the network without Telegram.
Skuratov said “Strictly speaking, no additional measures are required to launch TON by the community, except for a consensus within the community. But in order to get recognized, we will need to come to an agreement with investors (at least, with a majority of them)."
Skuratov highlighted that all the code necessary to launch TON is available online as it was published as open-source by Telegram. He explained that they would merely need to create the genesis block and could run the network on a minimum of 13 validators.
While the US Securities and Exchange Commission may have temporarily succeeded in stopping the launch of Telegram’s TON network, can they really stop open-source technology?
Images via Shutterstock
Image source: Shutterstock
