SEC Takes Another Swing At Telegram Banking Records

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The SEC is apparently asking for Telegram’s banking records for the second time in regards to its Gram ICO. The ICO reportedly raised $1.7 billion, breaking records.

Round 2

The SEC has previously had a request denied by the courts, who accepted Telegram’s argument that international laws would be broken. The SEC is trying again, though, coinciding with news that certain underwriters had asked Telegram for payment for the sale of tokens.

Telegram’s argument, the SEC says, is weak because international laws are rarely a barrier in federal cases.

There is no question that Telegram’s bank records are of critical relevance to this litigation. Defendants are correct that Howey mandates an objective test to determine whether investors in Grams had reasonable expectations of profits from their purchase. But it is equally true that post-investment actions by the parties ‘can serve as evidence’ of the parties’ expectations.

At the same time as the SEC’s new filing, new evidence reportedly showing third party companies invoicing Telegram for the sale of units, makes plain that Telegram was offering a security.

Unregistered Security

The SEC contends that Telegram offered an unregistered security. Telegram says that it was immune from filing requirements.

The agency says that Telegram has so far not acted in good faith, and that it clearly has no intent to comply with regulators. Regulators previously asked that all third party agreements relating to Telegram Open Network be divulged.

Commission-based sales are a telltale sign of a security, and the SEC now has evidence of multiple vendors doing so. The case appears to be open and shut from the regulator’s point of view, although Telegram seems to think it should be exempt.

Telegram’s record-breaking ICO has yet to lead to a viable product, with TON developers continually struggling to get off the ground.

The blockchain product continues to adjust expectations, recently announcing that parts of it won’t even work with the Telegram platform.