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21 February 2020

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

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

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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.

Now, the official Telegram channel for TON investors is suggesting that the launch, scheduled for Oct.

In 2018, Telegram raised almost $1.7 billion in two private token sale rounds, held in February and March.

According to the documents Pavel Durov filed with the SEC, only those investing a minimum of $1 million were allowed to partake in the TON sale.

In early October, Telegram published the entire TON source code on Github and announced that the launch of its long-awaited blockchain project would be scheduled for the end of the month.

Additionally, the company revealed that all investors had been provided with TON key generation software and were to receive their GRM tokens by Oct.

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. .

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.

Because the Securities Act of 1933 requires that all securities be registered with the SEC, the agency considers the sale of GRM tokens “unlawful.” Notably, according to public documents from 2018, Telegram had informed the SEC that both of its $850 million offerings were supposedly made under Rule 506(c) and/or Regulation S under the Securities Act of 1933.

Essentially, that means that because GRM tokens were sold only to accredited investors, the offering was not required to be registered with or qualified by the SEC.

“As of October 11, 2019, Telegram has not filed a registration statement with the SEC for this planned offering of securities.” Steven Peikin, co-director of the SEC’s division of enforcement, claimed: .

However, TON Board, a private channel created “by investors and for investors in the Telegram Open Network (TON) as well as for future major holders of Grams,” wrote:.

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