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We may have to wait longer for the ‘world’s most anticipated token,’ as its website claims. The SEC has officially ordered Telegram to ground the initial coin offering (ICO) of its highly anticipated blockchain project, Telegram Open Network (TON) .
The revelation of Facebook’s digital currency Libra brought about a deep awakening among big tech companies – including social media platforms. One of such big names to catch the bug and perhaps accelerate its crypto plans is Telegram, which fought tooth and nail to create its own native coin that would serve just about the same purpose as Facebook’s Libra.
The digital coin, named Gram, was about to be issued for public sale very soon. The social media firm has been promising that Gram will be used to finance the company’s business, creating and developing its native blockchain platform dubbed Telegram Open Network (TON).
According to the complaint filed with the federal district court in Manhattan, TON Issuer Inc. has been raising capital for the said project since January last year. And it was gathered that it has raised over $1.7 billion USD in the process.
The SEC report has it that TON Issuer Inc. has sold out about 2.9 billion Gram tokens. The tokens were allegedly sold during the initial offering to 171 different buyers across the globe. In its complaint, the SEC claims that over 1 billion of the said token was sold to 39 U.S. purchasers during the sale.
Selling unregistered tokens to U.S. investors is in violation of the SEC regulatory act, therefore, Telegram and its subsidiary TON Issuer Inc. are required to temporary halt all trading of the token.
While the Gram tokens were sold at a discounted price and initial buyers were promised the reward of having the first row seat when it finally enters the market, both entities failed to inform the buyers of the risk involved in trading the token. Adding to that, information regarding the business operations and financial conditions were also kept from the investors. As such, they are both instructed to halt sales going forward.
Commenting on the turn of events, Steven Peikin, co-director of the SEC, reiterated that exchanges cannot circumvent the law by branding their tokens.
“We have repeatedly stated 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 disclosure responsibilities designed to protect the investing public.”
Doubtfully that this would be the end of Telegram’s crypto and blockchain aspirations; it is much more likely that the company would do everything it can to bring the gargantuan crypto sale back on track.
We will keep you posted whenever there will be any new developements.