Last Saturday, the US Securities and Exchange Commission (SEC) suddenly announced that Telegram's $1.7 billion token sale was illegal, filed a temporary restraining order against two of its ICO entities, and accused of selling unregistered securities. Today, the development team of Telegram Open Network (TON) responded to investors.
In a letter from Telegram to investors, Telegram stated that they were "unexpected and disappointed with the SEC's choice to file a lawsuit." But Telegram said it has been trying to communicate with regulators and solicit feedback on the TON blockchain project over the past 18 months. The SEC said it had asked Telegram to respond to an administrative subpoena, but Telegram did not respond. Partly for this reason, the SEC has no choice but to file a lawsuit.
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TON raised more than $1.7 billion from token sales and promised to deliver tokens by October 31. Now, Telegram tells its investors that it will “pause” to learn more about the legal status of the TON project and its Gram tokens. They are evaluating whether it is necessary to postpone the release of TON.
After considering that Telegram's initial token issuance (ICO) was illegal, the SEC also filed a temporary restraining order, scheduled for trial in New York on October 24 .
After the news came out, New York Times tech journalist Nathaniel Popper posted a tweet on October 12, stating that several well-known investment institutions were involved in Telegram's $1.7 billion ICO, including Benchmark, Sequoia Capital and Lightspeed Venture Capital.
Yesterday, a private Telegram channel of Ton investors also deleted all previous posts and announced that it would suspend operations with increased regulatory uncertainty.
Earlier this month, the SEC reached a settlement with EOS parent company Block.one, which imposed a $24 million fine on unregistered ICO. However, BloxTax CEO Tomer Ravid pointed out in an interview that the case of TON and EOS is very different. The main difference is that EOS has almost no activity before ICO, so there is nothing to disclose. However, Telegram has a real company whose activities support TON, so (regulatory agencies) think they need to disclose a lot of information. In addition, in the case of TON, the US SEC seems to believe that there is fraudulent activity, and this is not part of the allegations against EOS.
Since the beginning of this year, the regulatory authorities have significantly increased the supervision of encryption projects, and the importance of compliance has become increasingly prominent, but the uncertainty of regulation is an urgent problem to be solved. The SEC has long been criticized for delaying the presentation of cryptocurrencies and ICOs. In late September, a number of US congressmen sent a letter to SEC Chairman Jay Clayton urging the committee to issue clear guidance on cryptocurrency. Earlier, Rep. Warren Davidson hosted a cryptocurrency roundtable, and participants expressed concerns about the existing legal framework for ICO and cryptocurrencies.