Russian Oligarchs to Invest in TON, - SEC

It's reported that Russian billionaires Roman Abramovich and Mikail Abyzov are the TON investors
05 March 2020   394

The US Securities and Exchange Commission (SEC) has announced the new names of investors of the Telegram Open Network blockchain project. CoinDesk reported it.

To the previously well-known participants of the $ 1.7 billion TON token sale, among others, billionaire Roman Abramovich and former Minister for the Coordination of the Open Government, Mikhail Abyzov, were added. They acquired tokens through offshore funds.

The new documents were disclosed as an appendix to the expert report of the University of Oregon professor Stephen McKeon, who was hired by Telegram to prepare an analysis of the blockchain project. The report was filed with the District Court of the Southern District of New York in January, but did not receive due attention. It is accompanied by many applications, including the “List of potential validators at the launch stage (second round buyers)”.

The second round ended in March 2018 and brought Telegram another $ 850 million in addition to the same amount collected earlier. The names of the participants were kept secret, and investors were forbidden to speak publicly about their investments.

The list includes Norma Investments Limited, owned by Roman Abramovich, who invested $ 10 million in the second round. Rumors about Abramovich’s participation in the TON ICO have been around since the end of the first round, but he himself never commented on this information.

The Larnabel Ventures fund, controlled by the family of billionaire Mikhail Gutseriev, is also indicated as a participant in the second round. He acquired $ 15 million Gram tokens.

Another participating fund, Batios Holdings Limited, is managed by Mikhail Abyzov, according to the SEC database. Abyzov was arrested in late March 2019 on suspicion of fraud. He ended his career in government in May 2018, that is, after the end of the Telegram ICO.

In addition, Jan Marsalek, CEO of Wirecard, a German payment service, was included in the list. He invested $ 7 million. Last year, Wirecard entered into a partnership with TON Labs to "develop joint digital financial services, payments and a banking platform."

Earlier it was reported that Qiwi CEO Sergey Solonin and Wimm-Bill-Dann founder David Yakobashvili became participants in the ICO TON. According to publicly available statements, they invested $ 17 million and $ 10 million, respectively. However, McKeon’s documents say that Yakobashvili could invest $ 50 million. This makes him one of the largest participants in the entire campaign.

SEC and Telegram met in court on February 19. As a result of the meeting, the judge promised to make a decision by April 30 - the date by which TON investors agreed to wait for the project to start without requiring a refund.

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   287

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.