The United States Securities and Exchange Commission (SEC) has announced that Telegram and the forthcoming GRM token constitute an unregistered digital token offering.
Per an Oct. 11 press release, the SEC has filed an emergency action and restraining order against Telegram and the Telegram Open Network (TON) in a complaint filed with federal district court in Manhattan.
The full complaint alleges that Telegram and TON did not register their sale of GRM tokens, which the SEC considers securities. Because the Securities Act of 1933 requires that all securities be registered with the SEC, the agency considers the sale of GRM tokens “unlawful.”
According to Stephanie Avakian, the co-director of the SEC’s Division of Enforcement:
“Our emergency action today is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold.”
Other SEC actions
Earlier today, Oct. 11, Cointelegraph reported that the SEC, together with other U.S. regulatory agencies the Commodity Futures Trading Commission and the Financial Crimes Enforcement Network, issued a warning to crypto asset holders against violations of the Bank Secrecy Act, especially use of crypto in money laundering and terrorism financing.
Two weeks ago, Cointelegraph reported from an SEC hearing before the House Financial Services Committee, following which many questions remained as to who would be taking the lead on determining the status of cryptocurrencies, regulators or legislators. At the time, SEC Commissioner Robert J. Jackson Jr. told Cointelegraph:
“Is this going to be more of a legislative move or an SEC move? […] At the moment I don’t know.”