However, the company failed to register its offering and sales of Grams, which are considered securities. Its failure is a violation of the registration provisions of the Securities Act of 1939, according to SEC.
Telegram violated federal securities laws
Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement, said they obtained a restraining order to prevent Telegram from flooding the U.S. markets with unlawfully sold digital tokens.
“We allege that the defendants have failed to provide investors with information regarding Grams and Telegram’s business operations, financial condition, risk factors, and management that the securities laws require,” added Avakian.
Avakian’s Co-Director Seven Pelkian further stated, “We have repeatedly stated that issuers cannot avoid the federal securities laws just by labeling their product a cryptocurrency or a digital token. Telegram seeks to obtain the benefits of a public offering without complying with the long-established disclosure responsibilities designed to protect the investing public.”
