Court Rejects SEC Request to Seek Telegram Bank Records

A New York court has denied a request by the United States’ securities regulator SEC to make Telegram reveal its bank records.

January 7, 2020, | AtoZ MarketsThe New York Southern District Court has rejected the Securities and Exchange Commission’s (SEC) attempt to get complete bank records from Telegram related to its token sales.

SEC will get access to some of the requested information

According to the report, the court held a telephone conference with the parties on Monday and Judge P. Kevin Castel signed an order denying without prejudice SEC’s letter motion to compel. 

There is, however, an option that the SEC will get access to some of the requested information, per the report. Telegram reportedly has time until Jan. 9 to declare a proposed schedule for a review of the requested bank records. This would ensure that the production of such records complies with foreign data privacy laws.

The SEC had urged the court to compel Telegram to provide documents, including “how much money Telegram has spent, and in what manner, in developing the TON Blockchain, the Telegram Messenger application to be integrated with the TON Blockchain, and related applications.” The SEC said at the time that these records are “highly relevant” in the case and that Telegram has refused to disclose financial details. 

The tussle between the SEC and Telegram

The SEC sued Telegram last October for allegedly conducting “illegal” token sales worth $1.7 billion. The case has been ongoing since then. Telegram, on its part, has refuted all the allegations made by the SEC. The company recently claimed that “if and when” Gram tokens launch, “they will constitute a currency and/or commodity – not securities under the federal securities laws.”

Telegram’s TON blockchain network was originally scheduled to go live on Oct. 31, but the company recently said that the SEC lawsuit made the launch timing “unachievable.” It, therefore, wanted to push the deadline for the TON launch to April 30, 2020. Investors agreed on the postponement and did not demand money back from Telegram.

Just yesterday, Telegram said that the TON Wallet won’t be integrated with the company’s popular messaging app at launch. It also stressed that the TON  blockchain network will operate independently from Telegram after launch.

Do you think that Telegram will come to an understanding with the SEC? Let us know your thoughts in the comments below.

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