The Securities and Exchange Commission of America, which is called “SEC” has filed a lawsuit in Manhattan. The main goal was to pause the unregistered primary location of tokens (ICO) of Pavel Durov’s Telegram. And they succeeded, though only temporarily so far. In their opinion, the tokens went on sale illegally.

From the Commission’s message it follows that the SEC received a court order, which states a temporary ban on 2 offshore companies. They are believed to be involved in the sale of Gram tokens in and outside of America. Telegram Group Inc. and its wholly owned subsidiary TON Issuer Inc. managed to raise about $1.7 billion from backers. The lawsuit states that the capital raising began in early 2018. The main purpose was to finance the business of these firms. And also in order to launch a blockchain platform called Telegram Open Network (TON) and the Telegram messenger.

In fact, the defendants managed to sell approximately 2.9 billion Gram digital tokens. And their prices were significantly reduced for 171 first-time buyers around the world.

Telegram must give them access to the tokens as soon as the blockchain platform is launched. And that should happen no later than 31.10.19. Only after that, they can be traded on the U.S. market. The lawsuit confirms that the defendants violated the rules of the securities law in the United States. As they have not carried out the registration of the token offer.

“Our emergency action is aimed at ensuring that Telegram does not flood the U.S. markets with digital tokens that we believe were sold illegally,” said SEC spokeswoman Stephanie Avakian.

She claims that the defendants did not give any information to investors about any token transactions. Not only that, they failed to mention the firms’ financial position and risk and governance factors.

The SEC has said more than once that issuers of digital currencies cannot circumvent the requirements of the Federal Reserve Act. Especially not by simply putting a label on a product such as a digital currency or token. She believes that Telegram wants to benefit from publicly posting information without complying with any requirements and regulations that help protect investors.

This lawsuit also involves imposing a fine on Telegram.

To date, Pavel Durov has not reacted in any way to the commission’s actions or the Manhattan court’s decision.

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Durov’s cryptocurrency

Telegram Group Inc. and its subsidiary TON Issuer Inc. began the process of raising funds in early 2018. And it was necessary for the creation of the blockchain platform Telegram Open Network (TON) by Durov’s team. The cryptocurrency for circulation in TON is called Gram.

Bloomberg Agency reported that at first, the plan was to raise 2.5 billion US dollars over the course of the ICO.

Now tokens are bought in a closed circle of investors. And each of them must have specific competencies in this area.

Investors from Russia have also become interested in the Telegram ICO. For example, Sergey Solonin, who is one of the founders of the Qiwi payment system, also invested his money in TON. David Yakobashvili, who founded Wimm-Bill-Dann, also did the same.

The media indicated that Alisher Usmanov, who founded USM Holdings, was directly involved in the Telegram ICO. However, the company itself denied these data.

In January last year, the media made an unusual publication, or rather a “white paper”. To be more precise, this is a special document, which contains a description of the principle of the future work of the blockchain-project Telegram. Its owners promised to redirect some part of the raised funds to the development of their digital currency Gram. Another part was to be spent on creating a blockchain platform Telegram Open Network (TON) with its own payment system.

The messenger says that its platform is entering into competition with many world leaders in the market of cashless transactions. These are mainly Mastercard and Visa. As a result, it is planned to create an entire economy inside the messenger, according to the experts of the TON project.

Now there is no such digital currency that would fit the role of a competitor to Mastercard and Visa, according to Telegram. As you know, Bitcoin can perform 7 transactions in 1 second. Therefore, it is difficult for it to compete with international payment systems. After all, they are able to process approximately 2000 operations/second. And this is while the speed of the TON system reaches millions of operations/second.

Telegram sincerely hopes that its “digital gold” will become massive. Since it is planned to be implemented in the messenger itself, which is used by a huge number of people.

The beginning of closed testing of TON fell on the middle of spring 2019. By the way, it was noted that the test version of the platform appeared in the public domain only in September. This is much later than was promised to the capitalizers. In addition, the messenger has another obligation to the sponsors. Telegram had to fulfill the launch of a working blockchain network, which is important for the SEC. In case of losing, Telegram representatives promised to return every penny of all the money to investors.

Not just Telegram

The SEC statement was not the only one. Together with it, such payment systems as eBay, Stripe, Visa, Mastercard decided to leave the Facebook project. But why? – you may ask. In fact, there is still to be a launch of digital currency called Libra. By the way, PayPal left the project not so long ago.

Regulators in the United States have also paid attention to the project. Until a month ago, France did not allow the digital currency Facebook in Europe. Bruno Le Maire, who is the country’s finance minister, made a statement that Libra carries risks for the financial system. Also, this cryptocurrency can be used for the purpose of some illegal transactions.

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