The US District Court has ordered the suspension of the GRAM, Token Telegram, approving a lawsuit filed by the US Securities and Exchange Commission (SEC). It should be noted that this ruling is only pending before the enforcement proceedings.
According to the CoinTelegraph, yesterday the court upheld the SEC’s request that the telegram is stopped. In court, we read:
According to court findings, the SEC proved part of a larger plan to distribute grams in a market to prove that the related contracts, including the sale of 2.9 million [tokens] to 175 buyer in exchange for $1.7 billion in capital. It is universal, it has succeeded. These grams will be supported by future telegram activities after being launched in this public market. With regard to the definition of financial instruments and to the definitions provided in the Howey Test, the court has concluded that, according to the [telegram] plan, the resale of the grams in a secondary public market is somehow unlicensed. Securities are counted.
The story of the Telegram and the US Securities and Exchange Commission began in October last year. The SEC holds that, based on the Howey 1934 Test, the Coin’s Initial Coin Offering (ICO) of the Year 2018 for the creation and publication of the Open Telegram Network (TON) is considered unlawful and unlawful.
According to the telegram, the company had completed the D-506-C form before its first round of launch and was able to provide tokens to investors without problems. This form is known as the “Exemption of Securities Offer” form and is required by the supplier when such securities are issued.
Despite the Telegram’s claim, the court has ruled that the telegram is not permitted to deliver gram tokens to secondary markets. In this part of the court order we read:
The sale of GRAMs by telegram to primary purchasers, who are the primary purchasers of stocks, is considered to be the first step towards the general distribution (a)4 of (c)506 securities;
The court also rejected a telegram claim that the SEC was not competent to investigate gram tokens problems. The court’s opposition to this claim can be attributed to all projects that were offered through the initial coin offering. In another part of the court order we read:
The court also rejects the telegram’s claim to provide a definition of securities in the case. While such a definition is briefly true, the securities in this case are not merely respected. Gram is not just an encrypted sequence of letters and numbers. The Howey test shows that Gram is an investment contract that comprises a complete set of contracts, exemptions and understandings that are centered on Gram distribution. The Howey test shows that it is necessary to present the integrity of both parties’ expectations.
The court’s ruling concludes in its closing argument that the telegram is currently suspended:
In the court’s view, supplying the early buyers, who themselves are trying to resell the tokens on the public market, will certainly create a risk in the future. This risk can be attributed to the full supply of securities without being registered with legal entities. The prohibition on supply is appropriate and necessary in these circumstances. This bans the sale of token tokens to primary purchasers and thereby stops further breaches.
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