TL;DR: The United States District Court South District of New York ruled in favor of the Securities and Exchange Commission (SEC) in its efforts to enjoin Telegram from distributing fruits of a $1.7 billion initial coin offering (ICO), tokens called Grams. Investors, such as Apple founder Steve Jobs’ widow, must now wait for a trial to determine whether Grams are unregistered securities.

Telegram ICO Investors Blocked by Court at Request of SEC

In a 44 page decision handed down on March 24, 2020, United States District Judge P. Kevin Castel ruled, “The Court finds that the SEC has shown a substantial likelihood of success in proving that the Gram Purchase Agreements, Telegram’s implied undertakings, and its understandings with the Initial Purchasers, including the intended and expected resale of Grams into a public market, amount to the distribution of securities.”

This means effectively stopping distribution of Grams to investors until after a formal trial determines whether the SEC will prove its case against the popular encrypted messaging service. ICO participants included Apple founder Steve Jobs’ widow, Laurene Powell Jobs, a Russian-Israeli billionaire, Roman Abramovich, and Mikhail Abyzov, a former Russian Minister of Open Government Affairs, according to BLOCTV.

Laurene Powell Jobs reportedly invested a minimum ICO pre-sale entry amount of $5 million in the Telegram Open Network (TON). The amount pales in comparison to the supposed fortune she took over after her husband’s death in 2011, some $20 billion. Just how she became involved with the controversial platform and an ICO wasn’t made clear. In all, some 40 US investors participated, purchasing 1 billion Grams.

Last last year, the SEC formally stopped the popular social media company’s ICO out of fear of permitting unregulated, unlicensed securities from flooding markets. For its part, Telegram argued Grams were not securities, but agreed not to distribute tokens until after legal controversies were dispatched. There appears to be a long road ahead.

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