US authorities have banned Durov's cryptocurrency

The U.S. Securities and Exchange Commission (SEC) announced that it has secured a restraining order against two offshore companies that allegedly conduct unregistered token offerings in the U.S. and abroad, in which they raised more than $1.7 billion from investors. Speech is about Telegram Group Inc. and its 100% subsidiary TON Issuer Inc.

Details. The SEC lawsuit states that in January 2018, these companies began raising investor money to develop the TON blockchain and the Telegram messenger mobile app. The Defendants sold approximately 2.9 billion tokens called Grams to 171 buyers worldwide, of which more than 1 billion Grams were sold to 39 investors in the United States. Telegram has committed itself to the ICO participants to launch the blockchain no later than October 31, 2019. By this point, investors and Telegram should have been able to sell billions of Grams in the US market, the document suggests. The SEC lawsuit alleges that the defendants did not register the sale and further circulation of Gram, and this is a violation of the provisions of the US Securities Act of 1933.

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Quote. “Our emergency measures are aimed at preventing Telegram from flooding the US market with digital tokens that were sold illegally. We presume that the defendants failed to provide investors with information about the business operations, financial conditions, risk factors, and governance of Gram and Telegram,” was quoted in a press release. SEC law enforcement co-director Stephanie Avakian

Second co-CEO Stephen Peikin added that the SEC has repeatedly said that issuers cannot escape federal law by simply calling their product a cryptocurrency or digital token. Telegram wants to get the benefits of a public offering without being held responsible for disclosures that should protect investors.

The SEC filed a lawsuit on Friday in the federal district court of Manhattan, demanding that urgent interim measures be taken, it follows from the document. It also lists the names of five members of the commission's cybercrime department who are investigating the case.

There has been no reaction from Telegram or its founders yet.

What's next. There is no established practice of settling SEC claims against cryptocurrency issuers yet. But last week, the regulator reached a pre-trial agreement with Block.One, which was filed a similar lawsuit for an unregistered $4.1 billion ICO conducted in 2017. Block.One agreed to pay a fine of $24 million. At the same time, the SEC took into account that the company began selling tokens even before the adoption of the ban on unregistered placements, and the placed tokens were already out of circulation. It is difficult to judge what the court's decision will be in the case of TON.

What about the project. in early October The Bell reported that the Telegram team sent a letter to investors on October 2 stating that the TON blockchain would be launched on time. In the letter, the developers also provided instructions on how investors can receive their cryptocurrency: for this, it was necessary to create a special crypto wallet, and it was proposed to do this no later than October 16.

In the context. Almost simultaneously with the SEC announcement, it became known that a rival project from Facebook, which is trying to launch a fiat-backed Libra cryptocurrency, was also facing serious problems. According to the WSJ, the largest financial partners of the social network - Visa, Mastercard, Stripe and Ebay - left the project. Even earlier, PayPal left the project. The companies' decision is most likely due to the fact that regulators in Europe and the United States began to sound the alarm as soon as the project was announced: in their opinion, Facebook does not provide enough information about how Libra will be protected from laundering and whether it will turn into it is one of the channels through which the financing of terrorism goes. The withdrawal of Facebook's largest partners from the project calls into question its continued existence, writes the WSJ, stipulating that some companies have reserved the opportunity to return to it when the regulators' questions are removed.

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