The Blockchain Association has offered its support to Telegram in its tangle with the Securities and Exchange Commission (SEC), claiming the authorities have “erred”. The association filed an Amicus curiae in support of Telegram in which they claim that the United States District Court for the Southern District of New York “erred” when they sided with the SEC and judged Gram tokens to be unlicensed securities, an act that forced the company to halt the distribution of the tokens.
SEC Accused of “Conflating” Token Sale and Distribution
The association accuses the court of treating Telegram’s token raise and distribution as one process instead of two separate ones, arguing that the ICO complied with stated regulations and should have been considered a “lawfully exempt security” instead of being bundled together with the distribution process:
The district court erred by conflating Telegram’s private placement and the future delivery of blockchain tokens. The two steps are legally and temporally distinct. Indeed, the tokens did not even exist at the time of the private placement. Treating the two steps as one defeats the purpose of the Commission’s private-placement rules.
Blockchain Industry Unfairly Targeted
The association argues that the blockchain industry has been unfairly targeted and that ruling will have ramifications for the entire space, stating that “the entire blockchain industry may no longer rely on long-standing exemptions that remain available to all other market participants”.
The association concludes that it “respectfully requests that this Court reverse the decision”, and that Telegram can distribute their tokens as planned.
Wait and See Game
An Amicus curiae is a filing that was not necessarily requested by either side but pertains to the case in question. They are a way for specialists not directly connected to a case to offer information, expertise, or insight that has a bearing on the issues at the heart of a case, so it stands to reason that the Blockchain Association, an organisation that comprises 27 member companies, would want to weigh in on the latest developments in this case.
Whether it will be enough to get the court to change its mind however remains to be seen.