SEC Taps 3 Experts on Why Telegram’s Token Is a Security

On Jan. 27, the SEC filed three expert reports in support of its firmly-held position that Telegram’s Gram tokens offered in its 2018 ICO “represented a security when sold and will represent a security when/if delivered.”

Back in 2019, the agency filed an emergency action and obtained a restraining order against Telegram, claiming that the company violated registration provisions of the Securities Act of 1933 by conducting “an alleged unregistered, ongoing digital token offering in the U.S. and overseas.”

Telegram argues that the only thing it “sold” during the ICO was a right to the future delivery of a commodity. 

In Telegram’s defense, the company was one of the first to drop the “conventional” ICO model and, in an attempt to avoid a direct collision with U.S. securities laws, employ the SAFT (Simple Agreement for Future Tokens) crowdfunding structure. At the time, legal professionals heralded the agreement as being perfectly compliant with U.S. securities…