The Legal Tango: SEC vs. Telegram

A U.S. federal judge recently decided to keep the SEC’s motion alive, striking Telegram’s ‘void for vagueness’ defense out of the ballpark. Talk about drama! In a letter dated November 25, the SEC urged the judge to discard Telegram’s proposed defense, arguing it doesn’t pass legal muster. Just a day later, Judge P. Kevin Castel pitched a curveball, keeping the motion on the bench for an extra fourteen days until the discovery phase wrapped up.

SEC’s $1.7 Billion Claim

Flashback to early October when the SEC threw down the gauntlet, claiming Telegram’s whopping $1.7 billion Gram (GRAM) token sale was as illegal as a cat in a dog show under U.S. securities laws. Telegram, feeling a tad defensive, pounced back on November 12, filing a motion with the Southern District of New York to dismiss the case entirely. Their argument? The SEC allegedly failed to provide clear guidelines on what constitutes a violation of federal securities laws. Classic legal back-and-forth!

What’s the Investment Contract Debate?

Telegram’s defense strategy hinges on the assertion that the SEC has muddled the waters regarding the term ‘investment contract’. They argue that the legal definition is so shaky that it raises valid points for dismissal. Andrew Rossow, an attorney with a flair for internet law, elaborated that the SEC views Telegram’s claims as nonexistent. He’s essentially suggesting that the SEC is hitting the replay button on their arguments, trying to keep them on record without continuously filing paperwork.

Sweeping Judgment on Definitions

The SEC is digging their heels in, citing the Howey test and precedents that supposedly define what an investment contract should look like. It’s like legal chess—every move counts! The SEC wants to ensure the judge knows that they think Telegram’s defense is not just weak, but fundamentally invalid.

Upcoming Depositions and Delays

Mark your calendars for January! The court has ordered Telegram’s founder, Pavel Durov, to step into the hot seat for a deposition regarding the Gram token sale on January 7 or 8, along with two other employees. Meanwhile, SEC’s legal strategies have already derailed the much-anticipated launch of the Telegram Open Network (TON) scheduled for October 31. Investors opted against cashing out refunds, thus delaying the launch to April 2020. Talk about a rollercoaster!