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The secure messaging app giant Telegram has asked the US court to dismiss allegations placed on the company regarding its Gram token being security by the Securities and Exchange Commission (SEC). The company drafted a court filing, detailing its case and rebutting the list of imputations hurled on the firm by the SEC, which was then submitted on Tuesday.
The filing states that the plaintiff’s claims were not based on any merit as Telegram’s private placement to a highly credible and acknowledged investors was conducted in pursuit of legit exemptions to registration as classified under the federal securities laws. The company alleges that the Gram digital currency is not a security when it was developed and during the time of the scheduled launch on the blockchain called Telegram Open Network (TON).
It further adds that the plaintiff has participated in improper regulation through enforcement in the still-budding part of the law. The filing asserts that the SEC failed to outline clear guidelines and issue fair notices of its aims as to what action falls under a violation of the federal securities laws. It has not stirred an ad hoc legal status that is conflicting with the judicial precedent and the popular views of the high-ranking officers within itself.
Telegram states that it has engaged voluntarily with the SEC, claiming to have asked for guidance on how to prevent any possible violations of the federal securities law. The company affirms that the regulator did not help them in time before the enforcement arm of the SEC decided to act.
On top of this, Telegram proclaims that its tokens are under development and have not been completed yet and when they are finalized, they will be classified as currency and/or commodity and will not be constituted as a security under the laws of federal security. The company agreed to halt the sale of its Gram token last month. The filing indicates that it was required of them to do so in order to maintain the status quo until the issue is resolved.
Telegram informed its investors that it was aiming to deliver the first produced batches of Gram by the end of October but due to the legal proceedings with the SEC and a restraining order, the company has to stop the token sale. Gram’s investors have agreed not to demand refunds as of yet.
The SEC has been involved with a lot of recent cryptocurrency headlines. The SEC has recently declined to approve Bitwise’s Bitcoin ETF in spite of a compelling argument for approval; the regulator also sued the initial coin offering (ICO) platform ICOBox for allegedly violating federal securities laws.