SEC Claims Telegram Injunction Is Applicable to “Any Person or Entity”

The United States Securities and Exchange Commission (SEC) has rejected Telegram’s request for clarity about the geography of the court injunction prohibiting the company from selling its Gram (GRAM) tokens.

In a letter to Judge Castel from March 30, the SEC stresses that the injunction “unambiguously, and properly, applies to Telegram’s delivery of Grams to ‘any person or entity’ […] and requires no clarification.”

The Gram tokens are linked to the company’s $1.7 billion initial coin offering (ICO) which raised funds to launch Telegram Open Network (TON) in 2018.

SEC states that injunction unambiguously applies to “any person or entity”

On March 27, Telegram’s lawyers filed a letter requesting clarification regarding the court’s March 24 injunction and its jurisdiction outside of the United States.

The letter stated that while the Supreme Court has earlier recognized “a ‘presumption against extraterritorial applications’ of the U.S. securities laws.’” Thus, Telegram plans to issue tokens to the investors that represent the $1.27 billion that the company raised from outside of the United States.

The SEC says that Telegram’s letter is “procedurally barred and legally meritless”, citing its injunction request, which aims at preventing Telegram from “delivering Grams to any person or entity or taking any other steps to effect any unregistered offer or sale of Grams.”

Despite the company’s letter being “styled as a request for ‘clarity,’” the SEC believes that “Telegram’s request is really a motion for reconsideration in disguise.”

TON community plans to launch network in spite of court ruling

On March 24, Judge Castel ruled that the SEC had “shown a substantial likelihood of success” in its attempts to prove that Telegram would distribute unregistered securities — granting a preliminary injunction against the company from delivering Gram tokens to investors. Telegram appealed Judge Castel’s ruling immediately.

Two days later, the founder of the TON Community Foundation said that the community was seeking to launch the network itself, since the code is open-source. Daniel Perez, the head of TON Spain, added:

“No one can prevent the launch of TON by any other entity, person or a community, [be]cause TON is a decentralized open-source solution. Already, there are two different test networks, and within the community, there is at least 1 group planning to launch the third.”