US authorities suspended the release of cryptocurrency Telegram Pavel Durov: who is next

U.S. Securities and Exchange Commission convinced, that messenger tokens were sold illegally, writes BBC.

Фото: Depositphotos

According to the SEC, the commission received a temporary injunction from the court against two offshore companies allegedly selling Gram tokens in the United States and abroad. Telegram Group Inc. and its wholly owned subsidiary TON Issuer Inc. attracted more than $1,7 billion in investor funds.

As stated in the lawsuit, fundraising began in January 2018 of the year to finance the business of these companies, including the launch of the Telegram Open Network (TON) blockchain platform and the Telegram messenger.

Defendants sold about 2,9 billion Gram digital tokens at discounted prices to 171 primary buyers around the world, including more than 1 billion Gram 39 investors in the United States, the lawsuit said.

Telegram promised to provide them access to tokens after the launch of the blockchain platform no later than 31 on October 2019, after which buyers could sell them on the US market. The complaint alleges that the defendants did not register the offer of tokens, thereby violating the rules of the American Securities Law.

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“Our emergency actions are aimed at preventing Telegram from flooding US markets with digital tokens that we believe were sold illegally,” said SEC spokeswoman Stephanie Avakian.

According to her, the defendants did not provide investors with information about operations with tokens, as well as about the financial situation of the company, risk factors and management, as required by the law on securities.

The SEC has repeatedly stated that cryptocurrency issuers do not have the right to circumvent the requirements of federal laws by simply labeling their product as a cryptocurrency or digital token, the commission said. Telegram, in its opinion, seeks to benefit from public offering without observing disclosure requirements aimed at protecting investors.

The lawsuit filed, in addition to suspending the ICO, involves penalties against Telegram.

Фото: Depositphotos

Durov has not yet commented on the actions of the SEC and the decision of the Manhattan court.

Cryptocurrency Durov

Telegram Group Inc. and its subsidiary TON Issuer Inc. began to raise capital in January 2018 for the development of the blockchain platform Telegram Open Network (TON) by the Durov team. The cryptocurrency for circulation in TON is called Gram.

As Bloomberg wrote, initially as a result of the ICO it was planned to raise 2,55 billion dollars. At the beginning of 2018, Telegram raised 1,7 billion dollars.

Tokens are sold among a closed circle of investors who have certain competencies in the field of blockchain technologies.

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Russian investors also became interested in the ICO of the messenger. Qiwi co-founders Sergei Solonin and Wimm-Bill-Dann David Yakobashvili invested in TON. The Vedomosti newspaper wrote that businessman Roman Abramovich also invested in Telegram.

The media also reported that the founder of USM Holdings Alisher Usmanov participated in the ICO of the messenger. Representatives of USM Holdings denied this information.

At the beginning of 2018, the media published a white paper-document that describes how the blockchain project of the messenger will work. The messenger owners promised to send part of the attracted money to create their own Gram cryptocurrency and the Telegram Open Network (TON) blockchain platform with their own payment system, the document said.

Фото: Depositphotos

Telegram expects that its platform will compete with world leaders in the cashless transactions market - Visa and Mastercard. As a result, an entire economy will be created inside Telegram, the TON project description said.

At the moment, not a single cryptocurrency is suitable for the role of a competitor to Visa and Mastercard, Telegram believes. Bitcoin with its speed of seven operations per second is difficult to compete with international payment systems, which process an average of about two thousand operations per second. The speed of the TON system will reach millions of operations per second, Telegram said.

Telegram expects that its cryptocurrency will become mass because it will be built into the messenger, which is now used by more than tens of millions of people.

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Closed testing of TON began in April 2019. In September, Telegram made a test version of the platform publicly available - much later than it promised investors, Vedomosti points out. At the same time, Telegram has an obligation to investors to launch a working blockchain network, which the SEC also pays attention to. Otherwise, the Telegram team promised to return their money to investors.

In early October, The Bell reported that the Telegram team sent a letter to investors, which promised to launch the TON blockchain on time. According to the publication, the developers also gave instructions on how to get their cryptocurrency to investors.

There is no established practice for resolving SEC claims against issuers of cryptocurrencies, writes The Bell. Last week, the regulator reached a pre-trial agreement with Block.One, to which a similar lawsuit was filed due to an unregistered ICO for 4,1 billion dollars in 2017. The company agreed to pay a fine of 24 million dollars.

Not just Telegram

The SEC statement was made simultaneously with the decision of the companies Mastercard, Visa, eBay and the payment system Stripe to leave the Facebook project, which is going to launch the Libra cryptocurrency. This was reported by the Financial Times.

Last week, PayPal left the project.

The project attracted the close attention of regulators in the United States. In September, France promised to ban Facebook cryptocurrency in Europe. The country's finance minister Bruno Le Mayor said that Libra carries risks for the financial system and can be used for illegal operations.

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