SEC proposes Order regarding distribution of “Grams” by Telegram

Maria Nikolova

Under the proposed order, Telegram will not offer, sell, deliver, or distribute “Grams” to any person or entity, until the conclusion of the hearing scheduled by the Court for February 18 and 19, 2020.

The United States Securities and Exchange Commission (SEC) has filed a proposed consent order in its case targeting Telegram Group Inc. and TON Issuer Inc. The document, submitted at the New York Southern District Court on October 18, 2019, concerns the offering of the digital tokens called “Grams”.

Under the proposed order, seen by FinanceFeeds, the defendants shall not offer, sell, deliver, or distribute “Grams” to any person or entity, until the conclusion of the hearing scheduled by the Court for February 18 and 19, 2020, except upon further order of the Court or agreement of the parties. At the Hearing, any party may move the Court for the continuation or dissolution of this Order.

Further, the parties, and any person or entity acting at the direction or on behalf of either or both of them, shall take all reasonable steps not to destroy, alter, or conceal any documents, books, and records, that are in their possession, custody, or control and are relevant to the allegations in the Complaint.

Also, the defendants shall promptly provide the SEC with notice of any amendments to the Purchase Agreements for Grams within two days following such amendments, along with a copy of the amendments.

According to the SEC’s complaint, Telegram Group and TON Issuer Inc. started raising capital in January 2018 to finance the companies’ business, including the development of their own blockchain, the “Telegram Open Network” or “TON Blockchain,” as well as the mobile messaging application Telegram Messenger. The companies sold approximately 2.9 billion digital tokens called “Grams” at discounted prices to 171 initial purchasers worldwide, including more than 1 billion Grams to 39 US purchasers.

Telegram allegedly promised to deliver the Grams to the initial purchasers upon the launch of its blockchain by no later than October 31, 2019, at which time the purchasers and Telegram will be able to sell billions of Grams into US markets.

The SEC’s complaint alleges that the companies failed to register their offers and sales of Grams, which are securities, thus violating of the registration provisions of the Securities Act of 1933.

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