US Court Extends Gram Token Distribution Prohibition

After a hearing which lasted two hours, a New York federal judge extended the injunction banning Telegram from selling its Gram tokens.

On February 19, Judge P. Kevin Castel of the US District Court for the Southern District of New York has reserved judgment on the preliminary injunction aimed at Telegram’s Gram sale conducted in 2019. This request for extension was made by the U.S. Securities and Exchange Commission (SEC).

The SEC regards the Gram token, described by Telegram as a utility token for the upcoming Telegram Open Network (TON), as a security. The regulator stopped Telegram’s ICO last October, and an injunction banning Gram token sale was set to expire on February 19.

If TON does not go live before April 30, investors may ask for refunds

The judge asserted Alexander Drylewski, Telegram’s lawyer, that he keeps the forthcoming April 30 deadline in mind. A clause in the Gram purchase agreement details that Gram buyers have the right to request a refund on their investment in case Telegram fails to get TON running prior to that date. However, the date was initially set for October 2019.

Drylewski agreed to extend the injunction after the judge stated that the court would have to make an immediate decision if Telegram rejected it.

The SEC’s attempts to stop Telegram

It is interesting to note that, despite being barred by the SEC, and the company itself being sued, today Telegram’s ICO is boasting the title of the second-largest ICO, having collected around $1.7 billion since January 2018 in two token sell rounds. The SEC charges Telegram with violation of Section 5 of the Securities Act of 1993, since the company did not register its tokens as securities.