Blockchain Association Supports Telegram in Legal Battle With SEC

Published on by Cointele | Published on

The Blockchain Association has filed an amicus curiae brief in response to litigation against Telegram initiated by the United States Securities and Exchange Commission.

Need for more clarity from the SECIn the letter, the association disputes the charges the SEC brought against the encrypted messenger in October 2019.

The SEC claimed that Telegram and the forthcoming GRM token constitute an unregistered offering.

The SEC has provided little clarity about its own interpretation of whether and when digital assets are securities, the association argues in the letter.

"The SEC has acknowledged that at least some digital assets are not securities, and that the status of specific assets under the securities laws can shift over time. Nothing in this case calls for a broader ruling that digital assets are always or presumptively deemed securities."

Telegram's funding model's compliance with the securities lawsThe Blockchain Association further argues that the purchase agreement model used by Telegram complies with U.S. securities laws; however, "The SEC has bizarrely chosen to attack the decision by Telegram to use an investment contract model that was designed expressly to comply with the SEC's own regulations."

"The funding model at issue both complies with the securities laws and addresses the policy concerns underlying those laws. The Court should not block a long-planned, highly anticipated product launch by interfering with a contract between sophisticated private parties. Doing so would needlessly harm the investors that securities laws were designed to protect."

The Chamber of Digital Commerce also filed an amicus brief in the ongoing court case between encrypted messenger service Telegram and the SEC, on Jan. 21.

The Chamber emphasized that it is not trying to prove whether Telegram's $1.7 billion Gram token sale was a securities transaction.

The Chamber has urged the Court to distinguish the term of digital asset, which is the subject of an investment contract, from the securities transaction associated with it.