Telegram stated the U.S. Securities and Exchange Commission (SEC) is overstepping its regulatory mandate and misapplying securities law, in a US court this week. The SEC meanwhile, maintains Telegram’s TON sale was an unregistered securities offering.
Telegram ICO is an Investment Contract, Says SEC
In its motion for summary judgment submitted to the court on Wednesday (January 15, 2020), the SEC maintained that Telegram’s Gram tokens are unlicensed securities. An excerpt from the motion quoted by Law360 reads:
In determining that the Grams were securities, this court should look to the economic reality of what Telegram was doing: raising money to build a platform that would create value and profits for the investors. Much like a stock certificate, a Gram represents an asset. Here, when sold to the investors, that asset was an investment contract.
According to the SEC, the $1.7 billion ICO satisfies the conditions set forth by the Howey Test. The SEC also argued that Telegram investors expect to profit from the launch of the TON…