US Securities Commission (SEC) fileda complaint against TON Issue Inc and Telegram Group Inc, the purpose of which is to ban the GRAM token due to violation of the terms of the token placement. How Pavel Durov responded to the complaint and whether the launch of TON will take place on October 31, read on.
TON investors received a letter in which Durovreported on the possible postponement of the TON launch date due to recent events. The letter also notes that further clarifications should appear within a week, but the founder of Telegram does not agree with the position of SEC.
GRAM: security or utility
2.9 billion GRAM sold during ICO171 investors. Telegram pledged to provide investors with access to tokens until October 31, 2019, after which cryptocurrency can be sold officially in the US markets.
The complaint is that the GRAM tokens wererecognized as security tokens, not utility. The difference between them is the purpose. Utility is intended for internal use in the company without the explicit purpose of earning money on them, while security tokens are a digital analogue of securities. Utilities do not fall under the influence of the SEC, unlike security. Valuable tokens must be registered with the SEC, but this procedure has not been performed for GRAM.
The next question is why GRAM was recognized as a valuable token. To do this, a Howey Test is conducted, in which the token is checked according to 4 parameters:
- Token must be purchased for money.
- The token seller company must be valid.
- The purpose of the acquisition is to make a profit.
- Profit can be obtained exclusively without the participation of an investor.
GRAM could be considered a valuable token, but there is a clause in the purchase agreement that gives a negative answer to the third question. It says that investors will not receive any dividends from the purchase.
If the Securities Commission agreed with this clause, GRAM would be included in the list of exceptions when security tokens can be traded without SEC control.
GRAM was going to sell under paragraph 506 (c), according to which trading can be carried out exclusively by qualified investors. For this, the ICO was conducted in a closed circle of individuals.
But the SEC decided to recognize GRAM as a security token,referring to the fact that investors are waiting for a significant profit from its sale. In the event of such an outcome of events, the token will most likely have to be removed from Telegram, because the application for consideration of the case is already in court.
The history of the confrontation between SEC and cryptocurrency projects provides two examples for predicting the future of GRAM: EOS and Kik.
In the case of ICO EOS, the trial did not even take place, sincemanaged to achieve a pre-trial settlement and pay a fine of $ 24 million. Lawyers insisted that tokens for ICOs (ERC-20 on the Ethereum platform) had not yet been registered under the SEC during the ICO, after which they were frozen.
The second example concerns the ICO of the Kik messenger. The main position of lawyers is based on the fact that the KIN token is not related to profit. However, the project messenger stopped working in September and at the moment the case is not closed.
No one knows for sure how in the futureSEC will arrive, but it is obvious that Durov should have had plan B for a long time, since it will take no more than two weeks to implement it. It is likely that the project will have to take a deferment to resolve legal issues for all SEC requirements.
TON was not conceived solely as a messenger for cryptanarchists and the option of evading US laws is unlikely. At this stage, the brains of lawyers are boiling, not programmers.
There is still a positive side to this confusion. TON once again received a good advertisement, because regardless of the outcome of the case, everyone is talking about him now.