Telegram has asked a court to clarify what exactly it must do to comply with the U.S. Securities and Exchange Commission (SEC) order banning the issuance of its gram tokens.
Last week, the New York Southern District Court Judge Kevin Castel issued a preliminary injunction in the case, prohibiting the issuance and distribution of the tokens for the messaging app company’s blockchain TON.
The judge decided that the SEC “has shown a substantial likelihood of success in proving” that Telegram’s private placement of tokens was an unregistered securities sale.
However, Telegram is still waiting for a more detailed order prescribing what exactly it can and cannot do as it prepares to launch its blockchain and investors await their paid-for gram tokens.
In a letter to Judge Castel on Friday, the company’s lawyer Alexander Drylewsky asked the court to clarify if the ban applies to the non-U.S. investors in TON. According to the court documents, about a quarter ($424.5 million) of the $1.7 billion Telegram raised in two rounds in February and March 2018 came from the U.S. investors. The rest, Telegram argues, are not subject to U.S. securities laws.
The company said it’s willing to take steps to fence off American investors while still fulfilling its obligations for others. “Should the Court require, Defendants will implement safeguards to protect against non-U.S. Private Placement purchasers reselling Grams to U.S. purchasers in the future,” the letter reads.
Such measures, it adds, could include a condition that non-U.S. investors may can only receive their grams if they are not going to resell them in the U.S., and that Telegram could “[configure] the TON digital wallet to preclude U.S.-based addresses.”
U.S. securities law only covers transactions in securities listed on domestic exchanges, and domestic transactions in other securities, the company argues, so Telegram still has “irrevocable liability” for its investors in other nations.
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