Securities and Exchange Commission After Telegram Banking Data

Must Read

Get Bitcoin with Arcade Games

RollerCoin is an online, virtual bitcoin mining game where you compete against your friends to mine bitcoins....

Visa and Mastercard Raise fees, Merchants faces towards Crypto

Credit card providers charge merchants a cut of the payments they accept, called interchange fees or swipe...

Get $200 Bitcoin for free hourly

Win upto $200 in Bitcoins every hour, no strings attached! Multiply your bitcoins, free weekly lottery with...
- Advertisement -
Earn Free Bitcoin

The Securities and Exchange Commission is once again requesting that Telegram provide bank records on its Gram initial coin offering (ICO). 

The timing of the request, filed on Jan. 10, coincides with new evidence of alleged underwriters requesting commission fees for the sale of Telegram tokens.

The reappearance of an earlier request

The request for banking data comes four days after a similar filing was declined “without prejudice” — meaning that the SEC was free to try again. Telegram challenged the request arguing that doing so would be a violation of foreign data privacy statutes. The commission sought to refute this argument by citing previous cases, noting that foreign privacy obligations were rarely an obstacle for depositions in U.S. federal cases.

In a conversation with Cointelegraph, Philip Moustakis, attorney at Seward & Kissel LLP and former SEC counsel, said that he believes “that the court will eventually require Telegram to turn over the bank records that the SEC seeks.”

The commission explained in its request that it seeks to obtain bank records to understand how Telegram spent its ICO funds:

“There is no question that Telegram’s bank records are of critical relevance to this litigation. Defendants are correct that Howey mandates an objective test to determine whether investors in Grams had reasonable expectations of profits from their purchase. But it is equally true that post-investment actions by the parties ‘can serve as evidence’ of the parties’ expectations.”

Moustakis continued to explain that the existence of these filings indicated disagreement between Telegram and the SEC, saying “Discovery disputes only get to the courts when there’s a problem.” He elaborated that the final resolution of the issue of these bank records may well happen between the two parties outside the court.

The SEC began action against Telegram’s $1.7 billion ICO in Oct. 2019. The commission argues that the token offering was an unregistered sale of securities, while Telegram maintains that it was exempt from registration due to several legal details.

Evidence of commission-based sales

Documents obtained by Cointelegraph show that the commission filed previously unseen evidence on the same day of the bank record request.

The evidence shows two third-party companies invoicing Telegram for fees deriving from Gram token sales to external investors. This evidence, if confirmed, would mean that these companies acted as underwriters for the ICO — a clear sign of a security offering.

It is unclear how the SEC obtained these documents. While they were not directly cited in the request for bank records, they may have emboldened the commission to push forward with the case.

The filing alleges that Telegram previously showed lack of good faith in the discovery process, which it argues “may weigh in favor of the SEC.” The attorneys referenced an Oct. 2019 request for all third party agreements relating to the Telegram Open Network (TON) blockchain, which were produced only on the day of the filing on Jan. 10.

While there are no indications of when the court will convene on the matter, the lawsuit is likely to continue progressing. Meanwhile, Telegram remains unable to launch the TON blockchain, delaying what was already considered a late start.

- Advertisement -
- Advertisement -

Latest News

Visa and Mastercard Raise fees, Merchants faces towards Crypto

Credit card providers charge merchants a cut of the payments they accept, called interchange fees or swipe...
- Advertisement -Earn Free Bitcoin

CubeBit has come forward to sponsor Future Blockchain Summit 2020

November-18-20 - CubeBit 2.0 has come forward to sponsor Future Blockchain Summit 2020. The event will be held at the Dubai World Trade Centre,...

USDT Is A Game Changer For Online Poker

CoinPoker - the flagman of the industry, the biggest and the oldest pure crypto poker room is the first to...

DeepTradeBot: The innovation of large companies at your service

DeepTradeBot is a collection of automated trading tools developed by Deep Neuro Networks LTD, a London, England-based company dedicated to artificial intelligence and...

Flyp.me Instant Crypto Exchange Now Supports REN Token Trading

Decentralized finance is leading the way of the cryptocurrency industry, with the REN Protocol at the front. REN Protocol is...