The Blockchain Association, an organization uniting Coinbase, Circle, 0x, Ripple, and other well-known crypto industry companies, has supported Telegram in a lawsuit with the US Securities and Exchange Commission (SEC) as reported by CoinDesk.
Acting as Amicus Curiae, the Association issued a brief with experts’ opinions stating that Telegram had made enough efforts to meet the requirements of the SEC.
The Association is confident that the lawsuit and the actions of the regulator can harm not only Telegram but the crypto industry as a whole.
“The Court should not block a long-planned, highly anticipated product launch by interfering with a contract between sophisticated private parties. Doing so would needlessly harm the investors that securities laws were designed to protect,” the association says in its brief
The Association’s appeal also says that companies working with blockchain and cryptocurrencies have been unable to get clear and unambiguous guidance from SEC on conducting business in their field for a long time. At the same time, the regulator’s litigation against Telegram makes the situation even grayer:
“The SEC’s lawsuit also raises novel questions regarding whether companies are forbidden from raising funds from sophisticated U.S. investors, under well-established regulatory provisions, to build blockchain networks.”
In conclusion, The Blockchain Association asks the court to “reject the SEC’s arguments that the not-yet-in-existence Grams were securities at the time of the Purchase Agreements.”
Does SEC go all-in?
The regulator published a memorandum expressing doubts that the Telegram Open Network project is being implemented at all. In particular, the SEC claims that there is no evidence of its readiness.
According to the Commission, if something has been done by Telegram, the product most likely will not correspond to what is indicated in the white paper and the documents provided to investors.
Key points formulated by the SEC:
Telegram decided to create a blockchain designed to replace Visa and Mastercard, but the company did not show the results of its work to the Commission or investors.
- There is only technical documentation describing the principles of the project.
- The team of Pavel Durov created really complex services, but it has no experience in implementing blockchain projects.
- Telegram did not give an answer to the exchanges on the placement of GRAM tokens while promising investors the sale of tokens for fiat.
- There is no information on the readiness of individual TON ecosystem services.