Federal courts proved themselves justifiable after announcing that Telegram, a notable social media service, has been forced to hand over all documents regarding their $1.7 billion initial coin offering. The court’s decision has resulted in the TON Blockchain Project from Telegram to be abandoned. Overcoming the legal hurdles would be challenging and costly for the social media provider, especially when considering the aggressive approach seen towards blockchain technologies within the United States and European Union.
US Federal Courts engaged in delegations with Telegram for several days before the decision was announced. Cryptocurrency communities worldwide began speculating on the possible fallout associated with these court proceedings. Most anticipated that the termination of TON would be inevitable.
The Founder & CEO of Telegram, Pavel Durov, provided a formal statement regarding this matter. He remarked: “Today is a sad day for us here at Telegram. We are announcing the discontinuation of our blockchain project. How? Imagine that several people put their money together to build a gold mine – and to split later the gold that comes out of it. Then a judge comes and says, these people invested in the gold mine because they were looking for profits. And they didn’t want that gold for themselves; they wanted to sell it to other people. Because of this, they are not allowed to get the gold.'”
Durov finished his statement by noting: “If this doesn’t make sense to you, you are not alone – but this is what happened with TON (the mine) and Grams (the gold). A judge used this reasoning to rule that people should not be allowed to buy or sell Grams like they can buy or sell Bitcoins.”
Details on the Court Proceedings
Telegrams involvement with the TON Blockchain Project is over, with there being a possible chance that other investors could revive it. Telegram is concerned about the fallout of their cancelled involvement, informing the blockchain market space that multiple entities will exploit their terminated efforts and brand themselves as TON to fool investors. This is one factor that the Securities & Exchange Commission in America didn’t consider in their ruling; multiple traders unfamiliar with this investing landscape will be exploited and lose their finances during the COVID-19 pandemic.
The court proceedings with Telegram and SEC were hostile, with the social media service rejecting multiple claims made by the Securities & Exchange Commission. This included disputing that Telegram was entering the public market to create financial scheme around US Consumers while avoiding specific laws to accomplish this task. It should be mentioned that Telegram never implemented illegal strategies with the TON Blockchain Project, as this social media platform is an honourable service that rivals Twitter and Facebook.
Telegram executives will now have to disclose all financial documents regarding the TON Blockchain Project. Some analysts speculate that SEC will purposely release fines onto these executives, even if the documents don’t warrant those individual penalties. Telegram lawyers will dispute any legal enforcement against Telegram’s founder and board of directors.