The U.S. Securities and Exchange Commission (SEC) secured an emergency restraining order con to the Telegram Group and its subsidiary TON Issuer for his or her $1.7 billion token sale.

The SEC introduced late Friday that it filed for and nontransmissible an emergency motion and restraining order halting Telegram from promoting or in any other case distributing its gram tokens throughout the U.S. The community was supposed to go dwell on Oct. 31.

Telegram bought 2.9 billion gram tokens “at discounted prices to 171 first purchasers worldwide,” the discharge expressed. This enclosed greater than 1 billion grams bought to U.S. buyers. However, the score avers that Telegram didn’t register its supply or sale.

SEC Division of Enforcement co-director Stephanie Avakian expressed in a release that the emergency motion is “intended to prevent Telegram from flooding the U.S. markets with digital tokens that we aver were unlawfully sold.”

Telegram unsuccessful to offer its buyers with details about the gram token and Telegram’s personal operations, she expressed.

Fellow co-director Steven Peikin added:

“We have repeatedly expressed that issuers cannot avoid the federal securities laws just by labeling their product a cryptocurrency or a digital token. Telegram seeks to obtain the benefits of a public offering without complying with the long-established revealing responsibilities designed to protect the investment public.”

Long-term challenge

Telegram has been growing its TON blockchain challenge for effectively over a 12 months, with rumors of its preliminary coin providing current in January 2019. Sources acquainted with the challenge later advised CoinDesk that the electronic messaging platform was trying to elevate as a lot like $600 million in a pre-sale and one other $700 million by a public providing.

Ultimately, Telegram claimed to boost $1.7 billion in a Form D revealing filed with the SEC in March 2019.

The firm has been incommunicative about its improvement work, entirely publication code for the community final month. Telegram didn’t even in public verify it was engaged on TON till this month, after it first emailed buyers to verify its late-October launch after which up up to now its phrases and situations.

Despite the truth that the gram token isn’t but dwell, a secondary marketplace for the cryptocurrency has already exploded, with small crypto exchanges and OTC desks buying and merchandising guarantees for tokens as soon as they’re issued.

Crypto change Coinbase has additionally introduced custody help for gram tokens as soon as they’re issued.

The SEC’s emergency motion Friday comes days after it settled with Block.One, the corporate behind the EOSIO challenge and EOS token. While Block.One raised $four billion, the SEC entirely secured a $24 million high quality, and won’t require Block.One to register EOS as a safety.

Telegram couldn’t instantly be reached for remark.