Telegram has been facing regulatory opposition since October for its 2018 ICO sale, and it seems that the fight for Telegram and its Gram token distribution is far from over.
A little over a week ago, the United States District Courts agreed with the US Securities and Exchange Commission (SEC) and its argument that Telegram’s Gram tokens should be considered securities under the Howey test, especially as introducing the Gram token into a secondary market for sale can be seen as a sale of securities where investors were promised higher returns on their initial investment. The court filed a temporary injunction on Telegram and ordered the firm to halt token issuance to all its investors.
Shortly after the injunction, Telegram submitted an appeal to clarify the court’s injunction so that they can distribute the tokens to non-US investors that do not fall under US jurisdiction and crypto regulations. Additionally, Telegram also argued that they would ensure US investors would be unable to get their hands on the tokens.
However, in the latest update from the courts, Telegram has struck another dead end with US District Judge P. Kevin Castel rejecting the appeal. He was not convinced by Telegram’s assurances that they would be able to prevent US investors from obtaining the tokens as the firm has not provided sufficient details for their plan, while the crux of the issue at hand is the secondary sale of Gram tokens, which Telegram intends to proceed with.
“Focusing upon the Initial Purchasers and their Gram Purchase Agreements misses one of the central points of the Court’s Opinion and Order, specifically, that the ‘security’ was neither the Gram Purchase Agreement nor the Gram but the entire scheme that comprised the Gram Purchase Agreements and the accompanying understandings and undertakings made by Telegram, including the expectation and intention that the Initial Purchasers would distribute Grams into a secondary public market,” the judge contended.
It is unclear how Telegram will move on from the failed appeal. As both the SEC and Telegram are at a stalemate, Telegram may well have to make adjustments to their roadmap and plan to move forward.
You may also want to read: Telegram Faces Temporary Injunction from the SEC on Token Issuance