Investors Told About TON Launch Postpone

The decisive factor of the delay's length will be the outcome of the hearing scheduled for October 24 in the court of the Southern District of NY
16 October 2019   1114

The team of Pavel Durov is supposed to solve all the problems with the SEC within six months to a year. The launch of the Telegram Open Network (TON) may be postponed for such a period, Forbes reports with reference to project investors.

The decisive factor will be the outcome of the hearing scheduled for October 24 in the court of the Southern District of New York. On it, the SEC will explain why it considers the Gram cryptocurrency a security, and TON representatives will present the rationale for lifting the temporary ban on the distribution of coins.

Up to this point, there will be no official statements, sources said.

The TON investigation is being conducted by Daphne Waxman, Morgan Ward Doran, and John Enright, known to the Block.one community.

On October 11, the SEC through a federal court achieved a temporary ban on the distribution of Gram cryptocurrency among investors. The agency believes that the asset is a security, and Telegram violated US law during the ICO.

Durov disagrees with the position of the SEC, but the postponement of the project is considered among possible solutions.

In contracts with investors, the launch deadline indicated October 31, but a clash with regulators is supposedly treated as force majeure along with a natural disaster. Such an interpretation may allow Durov not to return funds in the event of a delayed launch.

Court to Ban TON Tokens Release

U.S. District Judge P. Kevin Castel, of the Southern District of New York issued a temporary restiction, therefore supporing the SEC
25 March 2020   944

The American court issued an order to the developer of the Telegram messenger, according to which he should refrain from the distribution of tokens of the TON blockchain project planned for next month.

According to CoinDesk, on March 24, the District Judge of the Southern District of New York, Kevin Castel, issued a temporary injunction, recognizing the SEC's arguments regarding the sale of unregistered securities by the company as reasonable.

The Court finds that the SEC has shown a substantial likelihood of success in proving that the contracts and understandings at issue, including the sale of 2.9 billion Grams to 175 purchasers in exchange for $1.7 billion, are part of a larger scheme to distribute those Grams into a secondary public market, which would be supported by Telegram’s ongoing efforts.

 

Kevin Castel

U.S. District Judge

According to the judge, this feature does not allow considering the Telegram offer as subject to exceptional conditions. He also noted that Telegram structured its project in such a way as to attract “the maximum number of primary buyers” against the background of the expectation of maximum profit at the time of launch.

Considering the economic realities under the Howey test, the Court finds that, in the context of that scheme, the resale of Grams into the secondary public market would be an integral part of the sale of securities without a required registration statement. 

 

Kevin Castel

U.S. District Judge

Conducting an analysis from the standpoint of the Howey test, the judge stated that buyers expected to profit from participating in the campaign. Moreover, although Telegram may argue that it will not become a guiding force in the further development of TON, “in fact,” it will be precisely this.

The judge agreed to distinguish between non-existent Gram tokens and securities purchased by TON investors, but refused to support Telegram's argument that Gram would be a commodity.

The Court rejects Telegram’s characterization of the purported security in this case. While helpful as a shorthand reference, the security in this case is not simply the Gram, which is little more than [an] alphanumeric cryptographic sequence.

 

Kevin Castel

U.S. District Judge

This is not the final decision, but it can serve as a powerful indicator of what position the court will adhere to further.