THELOGICALINDIAN - If the SEC wins aboriginal Telegram investors ability never see their Grams
On Jan. 27, the SEC filed three able letters in abutment of its firmly-held position that Telegram’s Gram tokens offered in its 2018 ICO “represented a aegis back awash and will represent a aegis when/if delivered.”
Back in 2019, the bureau filed an emergency action and acquired a abstinent adjustment adjoin Telegram, claiming that the aggregation abandoned allotment accoutrement of the Securities Act of 1933 by administering “an declared unregistered, advancing agenda badge alms in the U.S. and overseas.”
Telegram argues that the alone affair it “sold” during the ICO was a appropriate to the approaching commitment of a commodity.
In Telegram’s defense, the aggregation was one of the aboriginal to bead the “conventional” ICO archetypal and, in an attack to abstain a absolute blow with U.S. balance laws, apply the SAFT (Simple Acceding for Future Tokens) crowdfunding structure. At the time, acknowledged professionals heralded the acceding as actuality altogether adjustable with U.S. balance regulations.
The SEC is now arguing it’s absurd to abstracted the “Purchase Agreements” from the Gram tokens themselves because the Grams are the representation of the holders appropriate to the abeyant amount basal them.
Experts Weigh in on the Token
On Jan. 27 the SEC filed three letters in abutment of its position on several key abstruse and bread-and-butter aspects of the matter.
Carmen A. Taveras, Ph.D. in economics and banking economist at the SEC, was asked to call the Reference Amount formula, account the discounts accustomed by Gram investors in the clandestine adjustment with account to the accepted Reference Amount at the TON Blockchain launch, and admonish on Telegram’s adeptness to agreement the amount adherence of Grams.
The SEC’s ambition with this report is to appearance that Gram investors purchased the tokens with expectations of profit. After all-encompassing assay of Telegram’s accessible documents, Mr. Taveras accustomed at the afterward conclusions:
Moving on to the additional affidavit report, the SEC asked able attestant Maurice P. Herlihy — Ph.D. in computer science — to appraise the cipher of the “testnet” adaptation of the TON Blockchain and admonish on the accepted accompaniment of the TON network.
The able attestant assured that the accepted “testnet” adaptation of the cipher “lacks analytical apparatus that would be appropriate in a absolutely developed and active system” and that the TON Blockchain “is not yet complete enough” to abutment the apartment of apps and casework as declared in the accessible abstracts appear by the company.
Lastly, the SEC retained Patrick B. Doody — a blockchain abstracts scientist at the argumentative abstracts analytics and bread-and-butter consulting close Integra — to apart assay and admonish on the angle of a reasonable client of Grams.
According to Mr. Doody’s able opinion, it was reasonable for a client to buy Grams with the apprehension of accumulation acquired from the assignment of Telegram in developing TON’s blockchain ecosystem.
Doubling bottomward on his claim, Mr. Doody states:
“It was absurd that a reasonable client would access Grams in adjustment to acquirement appurtenances and services, because, amid added reasons, there were no identifiable uses for Grams at the time.”
The third report additionally credibility to the actuality that Telegram absolutely told abeyant purchasers they would advertise them Grams at abundant discounts to the accepted Reference amount at the barrage of the TON blockchain. Mr. Doody adds:
“Telegram took this amount abutment a footfall added by cogent abeyant purchasers through its alms abstracts and the TON Whitepapers that it would authorize a action for the TON Foundation to repurchase Grams anon if the bazaar amount alone beneath bisected the Reference Price.”
Not so Simple After All
Turns out, Simple Agreements for Future Tokens are not so simple afterwards all. Just because tokens accept a account doesn’t accomplish them “commodities.”
The SEC argues that, alike if Grams anytime about-face out to accept some anatomy of utility, the absoluteness is that for the antecedent investors, the tokens served alone as a agency to banknote out of their investments.
The Commission reports:
“Sophisticated purchasers accepted they were affairs a abstract but potentially advantageous advance befalling embodied by Grams—not a accessible article like oranges.”
Will Telegram administer to get out of this alive? The abutting cloister audition is appointed for Feb. 18, 2024.
