The American financial watchdog has decided that the token sale of Telegram Open Network (TON) was illegal. Telegram raised 1.7 billion dollars with this ICO.
No clear feedback from SEC
TON has sent an email to all its investors stating that they have been in the process of receiving feedback from the United States Securities and Exchange Commission (SEC) for 18 months. They disagree with the decision of the SEC. TON writes:
“We were surprised and disappointed that the SEC chose to file the case under these circumstances and we disagree with the legal position of the SEC.”
The hearing is scheduled for October 24
In the email, Telegram stated that they will continue to investigate to resolve the situation. One of the means that they can and want to use is to postpone the hearing. After the SEC declared Telegram’s initial coin offering (ICO) illegal, the court hearing is scheduled for October 24 in New York.
Following the news, Nathaniel Popper tweeted from the New York Times (also a writer of Digital Gold) on 12 October to point out the involvement of large, experienced investors. Benchmark, Sequoia and Lightspeed also participated in the ICO of 1.7 billion dollars. He wrote:
The SEC’s move to shut down Telegram’s crypto project raises questions about the big venture capital firms that gave it $ 1.7 billion and convinced themselves that it would pass regulatory muster. That includes Benchmark, Sequoia and Lightspeed.
- Nathaniel Popper (@nathanielpopper) October 11, 2019
Criticism of SEC due to lack of clarity of crypto policy
The SEC is criticized by the crypto world because of the lack of clarity with regard to cryptocurrencies and ICOs. At the end of September, a group of US Congress legislators sent a letter to Jay Clayton, the president of the SEC. This called on the SEC to provide clear guidelines on cryptocurrency. Earlier, the Republican Member of the House of Representatives of the United States organized Warren Davidson, a survey on cryptocurrency. Participants were able to raise concerns about the existing legal framework for ICOs and crypto.
Earlier this year, a senior member of the libertarian Competitive Enterprise Institute, John Berlau, criticized the SEC’s approach to regulating cryptocurrency. The argument is that the stifling rules kill transformative innovation. He also argued that the control of the SEC could threaten the functionality of blockchain technology if the agency considered cryptocurrency’s as security.