SEC questions readiness of Telegram's blockchain TON and GRAM token
The US regulator urges the company to reveal the extent of development of the projects
The US Securities and Exchange Commission (SEC) has called into question the development of Telegram's blockchain TON and the use cases of its token GRAM. This is according to recent documents filed in the court of the Southern District of New York.
The regulator claims Telegram has not yet presented any evidence of the TON blockchain's current state of development. Moreover, the SEC doubts whether Telegram has clearly marketed any expected use cases for its token GRAM.
The documents were filed in response to Telegram’s earlier motion in which the company in part described the uses of GRAM. However, the SEC does not seem satisfied with the explanation and the process will probably move to the court.
Telegram says GRAM can be used within certain applications still in development but without listing any particular software.
According to the SEC, the situation with the applications and their stage of development needs to be clarified.
“Telegram’s chart does not distinguish which potential applications have been developed, which are in the process of development, and which are theoretical. There is no direct, reliable evidence in the record regarding the nature or state of any of the potential applications listed in Telegram’s chart,” the SEC filing reads.
In October, the SEC announced it was suing Telegram Group Inc and its wholly owned subsidiary TON Issuer Inc for raising $1.7bn (£1.3bn, €1.5bn) in an unregistered digital token offering. The documents claimed that Telegram sold more than 2.9bn digital tokens called “Grams” to 171 investors worldwide, with more than 1bn Grams sold to 39 US purchasers.
Knocked back by a sudden lawsuit in one of the most important jurisdictions, Telegram was forced to delay its blockchain launch – a move approved by the majority of the investors.
FURTHER READING: SEC says Telegram's token sale was substitute for equity funding
FURTHER READING: Telegram to delay its blockchain launch following SEC pressure