Embattled messaging service Telegram is requesting its investors of the proposed Telegram Open Network (TON) blockchain to push back the allocation of Gram tokens that were presold in 2018 to allow for a legal battle with the SEC. Last week, the SEC secured an emergency temporary restraining order from a federal court seeking to stop the forthcoming Gram issuance that was scheduled for October 30th.
According to the seller agreement from the Telegram private token sales that were conducted at the beginning of 2018, the investors were entitled to receive the Gram tokens on or before October 30th 2019, failure to which, Telegram is supposed to return the investor funds.
Telegram was supposedly working towards ensuring that it delivered on the October 30th deadline but now the SEC has thrown a curveball which threatens the successful rollout of the TON network. In a second letter sent to the investors, Telegram is proposing that it pushes back the deadline for the launch of TON as well as the issuance of the Gram tokens to April 30th 2020. To postpone, a majority vote is necessary but one oddity to this exercise is that both groups of investors - the participants of the first and second private sales - need to vote separately. A majority vote from each group is necessary to postpone the launch. This means that there is a possibility of either group voting in reverse of the other.
“In the event that only one group approves the extension, then that groupâ€™s purchase agreements will remain in place while the other group of agreements will be terminated,” Telegram wrote in the letter. “In these circumstances, we propose to make certain limited amendments to the terms of the purchase agreements that remain in place to reflect the fact that fewer Grams will be issued and in circulation on the Network Launch Date.”
The group that will vote not to postpone the launch will be receiving their funds on or before October 30th as per the initial agreement.
The SECâ€™s case is scheduled to be heard next week on October 24th to terminate the launch of TON. Telegram is seeking to hold the voting exercise before the court date.
The SEC, in its argument, states that Telegram and TON Issuerâ€™s 2018 token sale of Grams through a SAFT (Sale Agreement for Future Trade) was illegal terming the tokens as securities. This means that Telegram should have registered with the SEC to issue Gram tokens to investors. Telegramâ€™s argument is that it did file an exemption request back in 2018 titled Form D. Form D allows for an entity to sell securities without registering with the SEC but it has to ensure the participants of the sale are accredited investors, something Telegram made sure of by conducting a private sale. However, SEC maintains that the Gram tokens should have been registered because the participants of the two private sales are not barred from selling the tokens to non-accredited investors.
It is expected that both parties will stick to these arguments but this all remains to be seen next week in Manhattan New York where the SEC filed the case.
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