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SEC Shows Proofs Telegram Is Violating Securities Law

On Friday, the Securities and Exchange Commission (SEC) had filed invoices to the court. The SEC is claiming that brothers Nikolai and Pavel Durov were selling the Gram tokens after the initial pre-sale end.

If It Has No Flaws, Invent Them

Telegram officially claimed that they did not conduct any sales after the initial offering end.

However, the SEC representatives are sure that Telegram accountants have been messing with papers. Maybe Telegram managers got a total of 1.7 billion during the first token sale and added OTC volumes later. Or maybe Telegram didn’t have all the funds by 31 March 2018 and added some during the shiny summer of 2018.

According to CoinDesk, two private investment funds were buying the tokens heavily after the ICO end. In summer 2018, those companies, Da Vinci Capital and Gem Limited have sent Telegram LLC two invoices. These were presented by the SEC to the court, showing the claim for $209,783 and $1.1 million respectively as a reward for trading activity.

The invoices claim that the firms were conducting the additional sales of the GRAM tokens, on behalf of the Durov brothers’ entity – Telegram Limited. Since the operations took place five months after Telegram’s ICO in March 2018, the offer could contradict the Regulation D of the U.S. financial laws. Because the tokens are going via so-called underwriters, which is somewhat a prohibited practice:

“These documents undermine Telegram’s claimed affirmative defense that the Offering was exempt under Regulation D.”

According to Regulation D, the investors who buy the tokens from the issuer cannot re-sell them until the system’s official launch. They cannot take commissions from the Telegram founders for such activity, as well as keep the regulators without sight.

How Much Money Durovs Sold Months after the ICO?

You probably think that the noise is about some big, scary sum, right? No, it’s all about three small deals, not more. Specifically:

Gem Limited sold $8.6 million in GRAM tokens to the investment firm under the name Goliat Solutions. They also sold the GRAM tokens to Space Investments for $4.5 million. Da Vinci Capital sold over 2 million in GRAM tokens to an own subsidiary called ITI Funds.

Telegram had responded to the SEC’s tremendous found. They said that the people behind the nasty invoices are finders working for the investors from non-U.S. jurisdictions. Those agents sent invoices because they demand fees for their work. Which is, according to the Telegram, consists of finding the good projects to invest in an tip the other investment gurus.

Philip Moustakis, former SEC senior council, claims that the companies were not finders. If they demand fees for involvement in the act of somebody ‘discovers’ Telegram, they are trading agents. They were working under Telegram’s command, which is a violation of U.S. law. However, strange that the SEC is bashing Telegram with such small sums, considering that a few million is nothing big compared to $1.7 billion. 

The attack looks as if the SEC analysts have received an order. Which is – to find anything, even of the smallest importance. All to postpone the GRAM token development and launch. Why? Well, the U.S. regulators seem to be afraid that Durovs’ messenger will allow people to try the role of a centrally controlled Federal Reserve. The decentralized community of Telegram TON Network nodes is waiting to join the system at its start somewhere in the first half of 2020.

Author: Jeff Fawkes

Jeff Fawkes is a seasoned investment professional and a crypto analyst covering the blockchain space. He has a dual degree in Business Administration and Creative Writing and is passionate when it comes to how technology impacts our society.

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