The U.S. Securities and Exchange Commission secured an emergency restraining order against the Telegram Group and its subsidiary TON Issuer for their $1.7 billion token sale.
The SEC announced late Friday that it filed for and received an emergency action and restraining order halting Telegram from selling or otherwise distributing its gram tokens within the U.S. The network was supposed to go live on Oct. 31.
Telegram sold 2.9 billion gram tokens “at discounted prices to 171 initial purchasers worldwide,” the release said. This included more than 1 billion grams sold to U.S. investors.
SEC Division of Enforcement co-director Stephanie Avakian said in a statement that the emergency action is “intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold.”
Telegram failed to provide its investors with information about the gram token and Telegram’s own operations, she said.
Fellow co-director Steven Peikin added:
“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.”
The SEC filed a complaint in federal district court in Manhattan.
Telegram image via Shutterstock