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- The Southern District Court of New York has denied the SEC petition requiring Telegram to hand over ICO documents for GRAM.
- Further, Telegram has commited to show that it has not violated foreign data protection laws.
The Castel District Court for the Southern District of New York rendered a favorable decision in the case of the Securities and Exchange Commission (SEC) against the messenger company Telegram. The U.S. regulator required Telegram to produce documents regarding the issuance of an Initial Currency Offering (ICO) on the GRAM token. The order was to be complied with by January 9, 2020. The judge in charge of the case, Kevin Caste, denied the SEC’s demand.
The SEC began blocking the GRAM issuance in October 2019. At that time, the SEC issued a temporary restraining order against Telegram Group Inc. and its subsidiary TON Issuer. The regulator ordered the company to stop issuing GRAMs. Telegram responded to the SEC’s accusations, with the support of its investors, by delaying the launch of GRAM to April 30, 2020.
Court ruling on the ICO of the GRAM token
In a document presented on 6 January 2020 by the above-mentioned New York court, it was announced that the parties involved had held a telephone conference. During the meeting they reached a number of agreements relevant to the future development of the case.
First, the parties agreed to present the evidence without an evidentiary hearing. Second, the SEC may question the witnesses on the merits of the case without restricting the issuance of the GRAM token. Finally, the court denied the SEC’s demand that the telegram still had to prove that its conduct remained within the foreign data protection law. The court therefore made the following finding, which must be complied with on the same day as the SEC order:
The Court denies, without prejudice, plaintiff’s application to compel the production of defendant’s bank records. By January 9, 2020, defendant shall set forth in a declaration a proposed schedule for a review of the requested bank records to ensure that production of such records complies with foreign data privacy laws.
Although Telegram scored a small victory, the court could still favor the regulator. The case could set an important precedent for the entire cryptoindustry.
Telegram publishes document on TON and its GRAM token
Telegram made an important publication on the same day that the court was deciding the case. The company published a document in which it makes a definition of the TON (Telegram Open Network) network and the Gram token. The document attempts to shed light on rumors and clarify the public’s opinion of the project.
The most important clarifications made by Telegram are directly related to the legal case and the functioning of the TON. The document states that no one can buy or sell the Gram token yet. The company is careful to warn that those entities that are making “presales” of the token do so without the consent and approval of Telegram:
Neither Telegram nor any of its affiliates are involved in any public sales or presales of Grams. To the contrary, the TON Blockchain on which Grams will function is still in a Beta Test phase
In addition, Telegram clarified that it will not have any control over TON. The company also does not commit to develop applications that use the blockchain. It’s control will be totally in the hands of third parties:
Telegram’s goal and hope that the decentralized community of third-party developers and others will contribute to the TON ecosystem through the development of applications and smart contracts
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