Telegram’s token halted due to the US court and SEC

The order granted SEC’s request, that considers issuing the new token to be an unregistered offering of securities.

The United States district court issued a decision ordering Telegram to halt from issuing its cryptocurrency tokens, planned to be launched next month.

The judge order granted the request by the Securities and Exchange Commission’s (SEC), in what it considers issuing the new Gram cryptocurrency to be an unregistered offering of securities.

The SEC sued the messaging platform last autumn, claiming that Telegram violated the federal law when selling nearly $2 billion worth token back in 2018.

In a preliminary injunction from yesterday, the Court said that SEC has a plausible accusation of Telegram selling unregistered securities:

The Court finds that the SEC has shown a substantial likelihood of success in proving that the contracts and understandings at issue, including the sale of 2.9 billion Grams to 175 purchasers in exchange for $1.7 billion, are part of a larger scheme to distribute those Grams into a secondary public market, which would be supported by Telegram’s ongoing efforts.

The conflict between Telegram and security regulator

Hostility between messaging giant and SEC sparked last October when regulator accused the Telegram selling its Gram tokens as unregistered security under the Howey Test.

The Howey Test is a test created by the US Supreme Court in 1946 for determining whether certain transactions qualify as “investment contracts” if a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.

In 2018, Telegram’s initial coin offering (ICO) raised $1.7 billion when selling 2.9 billion Gram tokens mainly for the US investors. The security regulator, however, complained that the cloud-based instant messaging giant did not register its initial token offer or sale. The SEC immediately took an emergency action that was intended to prevent from flooding the US markets with tokens that were sold supposedly unlawfully.

Telegram countered SEC’s decision saying that even before the first token sale it had filed a Form D 506(c) Notice of Exempt Offering of Securities. The company claimed to have the right to sell its tokens to accredited investors.


This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Milko Trajcevski

Milko Trajcevski is a DailyCoin news reporter, mainly focused on Ethereum (ETH), Cardano (ADA), and their founders (Vitalik Buterin and Charles Hoskinson). Milko is an avid follower of crypto and blockchain technology and has written thousands of articles on the subjects. He finds joy in transforming complex issues into written content that anyone can understand. Milko has used and analyzed numerous exchanges, such as Coinbase, FTX, and Binance. He also closely follows all of the latest news around the largest decentralized exchanges (DEXs). Location: Skopje, Macedonia