Telegram has now officially withdrawn from the court battle against the U.S. Securities and Exchange Commission (SEC) for lifting the ban on Gram tokens.
May 25 2020 | AtoZ Markets – Telegram has backed down in its court battle against the U.S. SEC and will no longer be fighting the ban on its blockchain token project.
Telegram is withdrawing its appeal after a court decision backed the SEC
In a filing on Friday, the messaging app provider said it was withdrawing its appeal over a previous court decision that backed the SEC in prohibiting the issuance of “gram” tokens to investors both in and out of the U.S.
The new document filed with the U.S. Court of Appeals for the Second Circuit states:
“The parties in the above-referenced case have filed a stipulation withdrawing this appeal pursuant to Local Rule 42.1.”
The rule means that the parties have filed an agreement for dismissal of the case without prejudice. As such, the case is over for now, but not necessarily forever.
Telegram raise $1.7 billion in a private token sale in early 2018 to develop a blockchain named the Telegram Open Network (TON). The project was halted by the SEC for violating U.S. securities law in October, weeks before its scheduled launch.
After six months of written arguments from both sides and one hearing in the Southern District Court of New York, Judge Kevin Castel supported the initial preliminary injunction barring Telegram from issuing tokens to investors, on March 24. Telegram moved immediately to appeal, but that effort died with Friday’s filing.
On May 12, Telegram’s CEO Pavel Durov announced in a blog post that Telegram would no longer be developing TON. The post marked Durov’s first ever public statement about the project, which was being developed largely in secret.
Unhappy investors want to sue Telegram
Gram investors now have two options: to either take back 72% of their investment in TON, according to the agreement; or to loan the money to Telegram for one year, with a promise to get 110% in April 2021. Nevertheless, U.S. investors have only the first option.
Some investors told AtoZ Markets they had already received their refunds, while others said they had taken the loan route. However, a number have been unhappy with the outcome and are now considering suing Telegram. No filed lawsuit has been made public so far.
The TON project may not be completely dead, however. Earlier this month, a group of professional validators launched a forked version of the blockchain, named Free TON, with the technical support of TON Labs, a startup that previously helped Telegram with the project.
What do you think about Telegram withdrawing the court case? Do you side with the company or with the regulator on the issue? Leave a comment down below and let us know.