SEC Announced A Temporary Restraining Order Against Telegram 'Gram' Token

TON was billed as the principal crypto for the in-app economy of Telegram
Funds raised in two rounds that priced 'Gram' token at $0.37 and $1.33
Crytpo and Bitcoin Market Cap Story of Day

Crytpo and Bitcoin Market Cap Story of Day

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CRYPTO STORY OF THE DAY

In One Of Their Most Decisive Actions To Date, The SEC Announced A Temporary Restraining Order Against Telegram And Their 'Gram' Token - The Order Was Designed To Halt The Broad Issuance Of The Token Planned For The End Of October - Though This Decision Was Proactive, In Advance Of The Token Distribution, It Mirrors Reactive Action Brought Against KIK / KIN

The Telegram Open Network (TON) raised USD 1.7B equivalent via ICO in February and March of 2018 during the tail-end of the crypto-mania. Funds were raised in two rounds that priced the network's 'Gram' token at $0.37 and $1.33 respectively. TON was billed as the principal crypto for the in-app economy of Telegram, the popular messaging app boasting hundreds of millions of users. In spite of clearly being heavily associated with Telegram and even having some formal documents linking the messaging app's founding brothers Pavel and Nikolai Durov to the blockchain, Telegram, until last week had never publicly announced its involvement with the TON project. In justifying their 'emergency restraining order' the SEC claimed they were doing so to avoid the US being 'flooded' with tokens from an unregistered securities offering with investors that were, apparently, majority American. This is the Commission's second major action against an ICO backed by a messaging app after the recently-filed lawsuit against the KIK-backed KIN token.

Crypto Takeaway: The TON story reads very similarly to that of KIN. A popular messaging app, struggling to find a revenue model, launches a utility token to build a supposed 'internal economy' into their app at the height of the ICO-boom. In private marketing material obtained by the SEC, the TON project cites the potential for returns as great as 50x. The main difference between KIN and Gram is that the latter targeted fewer private investors while the former sold their token in a more public manner. Nonetheless, the SEC has clearly drawn a line in the sand that if an offering is marketed as implying the potential for any gain, it is a security and must be registered as such. 

 

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FRNT Financial is an Institutional Brokerage which offers clients a variety of products along with research & analytics in the crypto-space.