On January. 27., the Securities and Exchange Commission (SEC) fortified its example against Telegram, saying its Gram token is worth less than donuts.

The SEC's counter

In the latest in their boxing with Telegram and the Telegram Open Network (TON), the SEC argued in a memo to the Southern Commune Courtroom of New York:

"Telegram offered and sold Grams as securities when information technology promised to evangelize them in exchange for funds pursuant to the Purchase Agreements. That reality volition non take inverse if the Court permits Telegram to deliver Grams to the Initial Purchasers equally role of a broad public distribution, which is in violation of Section 5, and which the Court should enjoin".

In the memo, the SEC included a few barbs against the instant messenger service. It called out Telegram for doing "a ii-pace effectually the registration provisions" and performing "sleight of hand" by fabricating the difference between a purchaser'southward investment in Grams and their commitment of the Grams, which would allow them to withhold info ordinarily in regulatory statements. Pavel Durov's creation, the document contends, gave a "strawman" argument about "existence" since "Grams will never be tangible." The SEC put the frosting on when it wrote:

"Telegram's attempt to avoid this economical truth by labelling Grams 'commodities' besides fails. Grams are not commodities. Dissimilar gold, comic books, and Krispy Kreme donuts —  commodities Telegram compares to Grams — Grams have no intrinsic value."

Background

Cointelegraph reported on the start of Telegram's legal woes last year, when the SEC filed an emergency action to freeze the company'southward auction of Gram tokens.

Per the allegations, Telegram would have sold Grams only to accredited investors in the initial offering. But holders could then have resold them — a violation of Rule 506(c) according to the SEC:

"One time Telegram delivers the Grams to the Initial Purchasers, they will be able to resell billions of Grams on the open market to the investing public. Telegram and/or its affiliates will facilitate these sales on digital-asset trading platforms. Once these resales occur, Telegram will have completed its unregistered offering with billions of Grams trading on multiple platforms to a dispersed group of investors."