The Securities and Exchange Commission (SEC) of the United States has announced that they have filed an emergency action and obtained a temporary restraining order against Telegram for the USD 1.7 billion Grams initial coin offering (ICO). Apparently, during the ICO 1 billion Grams tokens were sold to 39 investors in the United States, violating federal securities regulations.
The reason this emergency order coming now is that the Grams purchased in the ICO were to be distributed on October 31, at which point billions of Grams would have illegally flooded the United States market.
The SEC is seeking a complete disgorgement, i.e. refund, of the USD 1.7 billion raised during the ICO, in addition to civil penalties, retroactive interest, and a permanent injunction.
Telegram was seeking to create a blockchain-based ecosystem called the Telegram Open Network (TON). However, this SEC lawsuit has the potential to kill TON and the associated Grams token before it ever launches and actually puts Telegram itself at significant risk. This case is perhaps similar to the SEC lawsuit against the Kin ICO, which was operated by the popular Kik messaging app. In that case, Kik ended up having to shut down after losing vast sums of money in a legal battle with the SEC.
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