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Telegram’s $1.7Billion ICO Halted by SEC for Unregistered Token Offering

The Cryptocurrency world has been facing the heat of SEC in recent weeks. A flurry of regulatory activity may be the start of another mass crackdown.

In a recent move, The U.S. Securities and Exchange Commission announced Tuesday it has filed an emergency action and obtained a court order to halt the ongoing token offering of Telegram’s TON.

The Complaint was filed in federal district court in Manhattan for conducting an alleged unregistered offering filed against two offshore entities behind the ongoing offering of TON digital token said to have raised more than $1.7 billion of investor funds overseas.

The SEC said, “Telegram Group Inc. and its subsidiary sold approximately 2.9 billion digital tokens called “Grams” at discounted prices to 171 initial purchasers worldwide, including more than 1 billion Grams to 39 U.S. purchasers”

The Investigation of the case is conducted by Daphna A. Waxman, Morgan B. Ward Doran, and John O. Enright of the SEC’s Cyber Unit under the supervision of Carolyn Welshhans and Lara Shalov Mehraban and Jorge G. Tenreiro and Kevin McGrath will lead the litigation.

As per the complaint filed, defendants failed to register their offers and sales of Grams, which are securities, in violation of the registration provisions of the Securities Act of 1933.

SEC charges both defendants with violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act and seeks certain emergency relief, as well as permanent injunctions, disgorgement with prejudgment interest, and civil penalties.

As Quoted by SEC,

“Our emergency action today is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement. “We allege that the defendants have failed to provide investors with information regarding Grams and Telegram’s business operations, financial condition, risk factors, and management that the securities laws require.”

“We have repeatedly stated that issuers cannot avoid the federal securities laws just by labeling their product a cryptocurrency or a digital token,” Steven Peikin, Co-Director of the SEC’s Division of Enforcement. “Telegram seeks to obtain the benefits of a public offering without complying with the long-established disclosure responsibilities designed to protect the investing public.”

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About Steve Anderrson

Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain. Join the official channel of thecoinrepublic, For the latest news updates: https://t.me/thecoinrepublic

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