On Tuesday, Judge P. Kevin Castel of the New York Southern District Court filed an opinion and order that once again showed who’s on the winning side between the US Securities and Exchange Commission (SEC) and instant messaging platform Telegram.
As per the court’s decision, Telegram is prohibited from releasing its native token GRAM, until at least the court trial. This development marks the second time that the company has to delay its token issuance due to the SEC’s wrath. Back in October, just a few weeks before the official launch of Telegram Open Network (TON) Blockchain, the SEC successfully acquired an emergency restraining order from a Federal court, claiming that Telegram had flooded the United States with unregistered securities in connection with the company’s $1.7 billion initial coin offering (ICO).
The court reasoned out that the SEC had shown a substantial likelihood that Telegram’s native tokens were more like securities based on the standards of the Howey test. On that same day, the instant messaging company filed a motion that seeks to appeal the court’s ruling. However, industry analysts were quick to say that Telegram stands no chance to reverse the decision.
According to a lawyer from Seward & Kissel LLP, Philip Moustaki, it would be challenging for Telegram to counter the court’s ruling against its native token. Notably, the company has to prove that the district court had decided without considering the facts or the law, or what he called an abuse of discretion.
Telegram had repeatedly argued that the initial agreements with the investors were indeed securities. However, it guaranteed that the second issuance, which was originally planned to happen alongside the launch of TON Blockchain, would have nothing to do with securities.