"We allege that the defendants have failed to supply buyers with data relating to Grams and Telegram's enterprise operations, monetary situation, threat components, and administration that the securities legal guidelines require". Although the overall goal of the app's ICO was an eye-opening $2 billion, Telegram has scrapped plans to open its offering to the public in order to avoid the murky regulatory waters governing the crypto industry. The social media firm has been promising that Gram will be used to finance the company's business, creating and developing its native blockchain platform dubbed Telegram Open Network (TON). The sale included over 1 billion Grams sold to US-based investors. The SEC targeted two offshore entities conducting an alleged unregistered, ongoing digital token offering in the USA and overseas that has raised more than $1.7 billion of investor funds.
SEC Orders the Standstill of Telegram's $1.7 Billion Gram Token Sale.
"We have repeatedly stated that issuers can not avoid the federal securities laws just by labeling their product a cryptocurrency or a digital token", writes Steven Peikin, fellow co-director of the SEC's Division of Enforcement, in a statement.
Sources familiar with the matter revealed that the encrypted messaging service provider was planning to raise around $600 million through a pre-sale and an additional $700 million via a public token offering.
The SEC said in a complaint filed in US District Court in NY that Telegram had planned for the Grams to be delivered to consumers by the end of October.
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Telegram's management said it had raised $1.7 billion in a Form D disclosure submitted to the SEC in March 2018.
Telegram has also remained oddly quiet about key details of its so-called TON network. Even with that, it wasn't until very recently that Telegram had publicly said that it was working on TON.
What irks the regulator the most is when companies issue tokens and don't register them with the SEC.
For this reason, the SEC asks to block GRAM on the evidence of a violation of the laws of the United States of America.