Judge orders Telegram founder and CEO to give testimony to SEC

$1.7bn token sale delayed

                                

A district judge in the New York’s Southern District has ordered Pavel Durov, the CEO and founder of the cloud-based messaging service Telegram, to testify in the ongoing case between the company and the Securities and Exchange Commission.

The encrypted messaging app was forced to postpone its $1.7bn token sale and Telegram Open Network (TON) blockchain project after it was sued by the SEC and accused of preparing to introduce unregistered securities into the US market. The digital tokens that were allocated to the project’s investors cannot currently be distributed and made available to retail investors until the case is resolved.

Telegram defended itself saying that, once issued, the tokens, “will merely be a currency or a commodity” not a security. It has thus far rejected all the allegations of impropriety and argued that it did register the token sale properly under the SEC Regulation D. It has asked the court to drop the commission’s action

Ilya Perekopsky, Telegram’s vice president, has also been ordered to testify. A founder of VK.com one of the largest social media platforms in Russia, Perekopsky was reportedly responsible for communications with investors during Telegram’s $1.7bn (£1.3bn, €1.5bn) token pre-sales last year.

Although its release has been postponed until April at the earliest, the TON project is still progressing behind the scenes. Telegram has released a desktop wallet app for the gram token, running on its test network and has released the code for its blockchain nodes instructing investors to generate their public keys and send them to the company for future distribution.

With over 200 million users and with some major cryptocurrency exchanges interested, the TON project would shake up the current crypto market, if it can emerge from its current regulatory quagmire.

FURTHER READING: Telegram to delay its blockchain launch following SEC pressure

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