The Securities and Exchange Commission (SEC) continued its battle against the popular messaging company Telegram, stating “its Gram token worth less than donuts.”
The market watchdog has argued in a memo filed to New York Southern District Court:
“Telegram offered and sold Grams as securities when it promised to deliver them in exchange for funds pursuant to the Purchase Agreements. That reality will not have changed if the Court permits Telegram to deliver Grams to the Initial Purchasers as part of a broad public distribution, which is in violation of Section 5, and which the Court should enjoin”.
The SEC has included some parties in the memo against Telegram, stating that the messaging service provider’s attempt to avoid economic truth by dubbing Grams as ‘commodities’ fails.
“Grams are not commodities. Unlike gold, comic books, and Krispy Kreme donuts— commodities Telegram compares to Grams — Grams have no intrinsic value,” SEC said.
SEC claimed that Telegram saw its upcoming coin Gram as a security. Thus, the market regulator has filed another claim to New York Court.
Shyam Parekh, investor relations manager at Telegram, said an investor has the right to 72,835,916.68 Grams, referring to the Grams as securities. “Such securities are not pledged,” he added.
SEC claims Parekh’s words boosted volumes, noting that the official should have used more accurate phrases.
The court earlier ordered the messenger service company to submit its banking statements to SEC by February 26.
Telegram has issued an initial coin offering (ICO) in two private placements, with the aim of using its proceeds in establishing a decentralized network for the app.
Cryptolydian earlier reported that New York Court has ordered Telegram to submit its banking statements to SEC by February 26.
The regulator had requested the court to force Telegram to submit some documents related to the sale of its Gram token sale, though which the company raised $1.7 billion.