Telegram Agrees to Turn Over ICO Documents To SEC
Nicholas Otieno May 11, 2020 06:12
Telegram has agreed to provide the SEC with ICO Documents.
According to a court order on May 8, Telegram has accepted to disclose information about its 2018 ICO to the US SEC (Securities and Exchange Commission). The company has also accepted to answer all questions that the regulator may require to shed more light on the disposition of investor funds.
In the recent past, Telegram’s lawyers requested that the application be dismissed, terming it as an “unfounded fishing expedition.”
However, the firm recently has signed an agreement with the SEC, which requires it to file with the regulator all financial documents requested before May 20.
The decision comes after several months of the legal battle between Telegram and the SEC. Telegram, the online messaging app, has ambitious plans for its Telegram Open Network (TON) blockchain. The company had one of the biggest token sales in 2018, which faces a huge legal battle. The SEC filed class-action lawsuit against Telegram to shut down the TON network, stating that its Gram tokens were unregistered securities. But Telegram argued that Grams were a commodity. The US District Court for The Southern District Of New York issued a ruling in which it sided with the SEC, preventing Telegram from issuing tokens.
Legal Battle Not Yet Over for Telegram
Telegram filed an order of consent on May 8, agreeing to hand over to the regulator information concerning tokens distributed to initial investors, including the funds it collected from those first buyers. Furthermore, Telegram will disclose all final written agreements, amendments, and any communications concerning its token sale agreement as well as those associated with the termination of such contracts.
The documents demanded by the SEC concerns the distribution of Gram tokens as well as purchase agreements related to its 2018 ICO in which Telegram raised over $1.7 billion. Telegram will respond to any questions that the SEC may ask concerning information the firm has provided in the past.
The SEC hopes that the information will show how much Telegram has spent from funds, which it raised in two token sales in 2018. Apart from that, Telegram will disclose details of the Gram token offering, which eventually allowed app owners to raise $1.7 billion from US investors.
Telegram’s decision to hand over the documents comes when the Free TON community (an independent group of software developers, users, and validators) decided to launch a version of the Free TON blockchain alongside Free TON tokens to be distributed to users. The community launched the Free TON blockchain despite Telegram’s long-running legal dispute with the SEC. The community claims that Telegram is not involved or included in the Free TON project.
Telegram Tells US Investors to Leave TON Blockchain Project And Take 72% Refund
At this point, there is nothing that Telegram could gain by fighting the SEC. Courts have sided with the regulator at all steps preventing Telegram from launching its TON network. It is because of concerns associated with unregulated securities. The company has postponed a second time the launch of its TON network on April 30. It first postponed the launch in October 2019. It now postponed the launch to take place on 30th April 2021. Telegram recently announced that due to more delays to the launch of its TON network, US investors must leave the project and accept a refund of 72% of their initial investment. The company said that it reached such a difficult decision because of the uncertain regulatory attitude in the United States. Currently, Telegram is fighting a legal battle with the SEC to obtain the go-ahead for its TON network. However, the company so far has no luck.
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