Home > News > Telegram Refuses to Hand Over ICO Data

Telegram Refuses to Hand Over ICO Data

Telegram is currently refusing to give details to the SEC regarding the use of the funds they raised in their ICO. Now, the SEC has filed a court order that would compel the release of those details. 

The SEC is prosecuting a case against Telegram for an unregistered securities sale, and their January 2nd court order for the use of funds details is part of an effort to determine what the $1.7 billion was used for. In their eyes, by understanding how much money was raised and what it was spent on would help them determine whether Telegram’s gram token would be considered a security or not. Some altcoins have been found to depend too much on “the actions of others” for their value, which is what would qualify them as a security. 

The court order goes on to say that the SEC needs to know about the development of TON Blockchain, the Telegram Messenger application, and related applications. All of these components will have their own roles in the Telegram ecosystem and by understanding the development financing, the SEC will be able to determine whether TON is a security or not. 

Emergency Action To Determine If Security

In October 2019, it was revealed that the SEC was taking emergency action against Telegram, which has since resulted in the delay of the launch of the TON blockchain. Telegram has denied any wrongdoing, as well as any allegations that their token is a security, but has also failed to cooperate thus far. The court order reads:  

“Defendants are now refusing to disclose the bank records concerning how they have spent the $1.7 billion they raised from investors in the past two years and to answer questions about the disposition of investor funds.”

New York Southern District Court Judge P. Kevin Castel demanded a response from Telegram by the end of last week regarding the required investment information. The urgency comes from the fact that this week, three Telegram employees are being deposed. 

Founder and CEO Pavel Durov will be one of the employees deposed, and it isn’t clear how he would continue to conceal this information if compelled by the court. The Judge seems to be waiting for a response before mandating that this information be brought forward. 

What is Telegram Hiding? 

There are several points of reasoning behind Telegram’s decision not to share this data. It is simple enough to see the perspective of the District Judge regarding any defendant who refuses to disclose how $1.7 billion was spent. 

It is possible this is outright rebellion since the Howey Test says that if the token’s value is dependent upon the efforts of others, it qualifies as a security. Other more well-known tokens, like Bitcoin and Ethereum, have been determined to be commodities and not face this problem, but small protocols like Telegram have been consistently facing this accusation.

Telegram may know this and not care, or maybe their account is too poor to properly provide this information. Thus far, they have provided credits, but not debits from their accounts, and blamed any shortage of transparency on their banking partners. 

Accepts customers from the USA
Offers 15 crypto coins to buy&sell including BTC, LTC, ETC, NEO and more
Trade on the world's leading social trading and investing platform
Open my Account

We use cookies to personalise content & ads, provide social media features and offer you a better experience. By continuing to browse the site or clicking "OK, Thanks" you are consenting to the use of cookies on this website.