SEC Issues “Emergency Action” to Stop Telegram ICO

The Securities and Exchange Commission (SEC) has stopped Telegram’s $1.7 billion GRAM ICO in its tracks by issuing an “emergency action” to halt the sale and distribution of tokens, just weeks before they were due to arrive. The SEC has accused the organization of conducting an “alleged unregistered, ongoing digital token offering in the U.S. and overseas” and has obtained temporary restraining orders against “two offshore entities” conducting the token sale.

GRAM Tokens “Unlawfully Sold” Says SEC

In the complaint, the SEC alleges that Telegram Group Inc. and TON Issuer Inc. sold more than one million GRAM tokens to 39 US citizens at a total of $424.5 million, but were not registered to sell securities. As a result, the companies have been charged with violating securities laws, with the SEC seeking “emergency relief, as well as permanent injunctions, disgorgement with prejudgment interest, and civil penalties.” Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement, stated that skirting securities laws put investors at risk:

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.

Investors Unconcerned by Telegram Offering

It is not known where the SEC’s filing leaves the Telegram project, which could feasibly still launch in other countries, although they may choose to put the entire project on hold. This would be extremely galling for the project given how far down the road they have come, although the ruling cannot have come as a surprise given the SEC’s known stance on ICOs. Any postponement or cancellation won’t seem to bother the average investor however, if a Twitter poll from eToro, who have since announced that they will list the token, is anything to go by:

The comments following the result of the poll emphasized the lack of excitement over the Telegram project by many in the crypto space, with one saying that it was simply, “A coin entirely owned and operated by millionaires looking to dump on the average investor.”

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