Popular messaging app Telegram, which is currently being investigated after a ruling by the Securities and Exchange Commission (SEC) that its GRAM token is a security, has hit back at the US regulator’s decision, accusing officials of being “unconstitutionally vague”.
The SEC alleges that Telegram and their investors ran a scheme where the investors would get tokens cheap, then dump them on crypto exchanges to bilk the eventual retail end buyers — and that the tokens are securities under the Howey test at every step of the way, so you can’t do that without the whole registration rigmarole required to offer securities to the general public.
“A conviction fails to comport with due process if the statute under which it is obtained fails to provide a person of ordinary intelligence fair notice of what is prohibited, or is so standardless that it authorizes or encourages seriously discriminatory enforcement.” -
Telegram maintains that the SEC’s guidance on its token sale, and indeed on token sales as a whole at the time, was insufficiently robust for the company to act entirely within guidelines. Lawyers subsequently ask the court to dismiss the SEC’s complaint entirely.
Telegram developers planned to launch the platform before the end of last month, but due to a lawsuit from SEC, it was necessary to postpone it for almost six months. The regulator also achieved a temporary cancellation of the results of the ICO. Because of this, the company actually lost the financing of the project.