US SEC Halts TON Launch Over $1.7B ICO — Highest-Level Action Yet?

Late Friday, the United States Securities and Exchange Commission (SEC) announced that it is suing two offshore entities, Telegram and its wholly owned subsidiary, TON Issuer, for holding an unregistered token sale. According to the complaint filed in the federal district court in Manhattan on the same day, Telegram sold approximately 2.9 billion crypto tokens, called Grams (GRM) to 171 buyers for a total of $1.7 billion. Around a quarter of that sum, $424.5 million, allegedly belonged to 31 purchasers based in the U.S.

As a result, the SEC has obtained a temporary restraining order against Telegram and TON, seeking “certain emergency relief,” as well as permanent injunctions, disgorgement with prejudgment interest and civil penalties. Now, the official Telegram channel for TON investors is suggesting that the launch, scheduled for Oct. 31, could be postponed.

The first problems concerning the TON token sale surfaced in July, when Gram Asia — reportedly the largest holder of Telegram‘s Gram tokens in the region — started selling rights to its GRM holdings in partnership with Japan-based crypto exchange Liquid at $4.00 per token, thus tripling the original $1.33 sale price.  Now, just a couple of weeks prior to the TON release, the SEC has stepped in with a restraining order, halting the token offering. The regulator’s complaint alleges that Telegram and its TON subsidiary did not register the sale of the GRM token, which the SEC deems to be a security. The court has ordered the defendants (TON Issuer and Telegram) to deliver “any opposing papers” no later than Oct. 18. Additionally, its representatives have been summoned to argue its  case in court on Oct. 24. Until then, the judge has warned Telegram against any ongoing or future violations, “including but not limited to by delivering Grams to any person or entity or taking any other steps to effect any unregistered offer or sale of Grams.”