- A New York Federal judge found that Telegram is likely to violate the securities law if GRAM tokens are distributed without registration.
- The temporary injunction delays the distribution of GRAM tokens to the initial purchases preventing.
Telegram, a leading social media messaging platform has in the last two years worked on the development of its cryptocurrency referred to as the GRAM token. The social media platform broke records raising over $1.7 billion in a private sale in 2018. In spite of the successful token sale, Telegram has not been able to smoothly release GRAM tokens into the market.
The latest hurdle is a temporary injunction issued by a Federal Judge in New York to delay the issuance of the tokens due to possible violations of the United States Securities laws. The court ruling read in part:
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.
According to the court:
Reasonable purchasers would not be willing to pay $1.7 billion to acquire Grams merely as a means of storing or transferring value. Instead, Telegram developed a scheme to maximize the amount initial purchasers would be willing to pay Telegram by creating a structure to allow these purchasers to maximize the value they receive upon resale in the public markets.
The temporary injunction is to delay the distribution of GRAM tokens to the initial purchasers in order to avert risks to the secondary purchaser once the tokens hit the market. Moreover, Telegram has the time to consider getting a registration statement with the Securities and Exchange Commission (SEC). Once cleared, the distribution of the tokens will carry on as planned.
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