Following Friday’s emergency restraining order by the U.S. Securities and Exchange Commission (SEC) against Telegram’s Open Network (TON), which is responsible for developing, issuing and launching the much anticipated gram coin, the TON network has issued a response to its investors.

In its letter, the TON team admitted that the action was not something they were expecting so close to the proposed launch of the gram token at the end of October: “We were surprised and disappointed that the SEC chose to file the lawsuit under these circumstances, and we disagree with the SEC’s legal position.” The TON team also indicated in their letter that the firm has been trying to solicit feedback from the SEC for the past 18 months regarding the TON blockchain, but has not been successful.

 

Furthermore, TON indicated that they “are continuing to evaluate the best means by which to resolve the situation in the interests of relevant parties, including but not limited to assessing whether to seek to delay the launch date.” At this point it is unlikely that the gram coin can launch at the end of the month, considering that the first legal hearing regarding the SEC’s emergency order is scheduled for October 24th.

On the other hand, as noted by New York Times tech reporter Nathaniel Popper “the SEC’s move to shut down Telegram’s crypto project raises questions about the big venture capital firms that gave it $1.7 billion and convinced themselves that it would pass regulatory muster. That includes Benchmark, Sequoia, and Lightspeed.”

Given that TON has such influential backers, why then did it not take the time to self-scrutinize its token offering and file the appropriate registrations for its token distribution? Especially considering that US persons were invited to and participated in the private distribution of the token in 2018.

As the head of the Blockchain Expert Committee, Steven Hatzakis points out: “the [SEC] action seems reasonable as their token is still deemed a security under the Howey test, given the underlying network is not yet decentralized.”

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