Just like Whatsapp and other social interaction apps, Telegram is also an application that allows the user to communicate with each other via texts, voice-calling, and video-calling features. Over the past couple of years, Telegram has earned itself a respectable position among the ranks of the top instant messaging and video-telephonic applications.
Telegram has gained a significant amount of popularity among the cryptocurrency enthusiasts. In the year 2017, Telegram made its way into the hot crypto-news when it announced that the telegram team is planning to raise funds that would be brought into use to back the development of a new crypto-asset which is known as dubbed Gram. They also shared another plan that would be to develop an open-network, new applications to expand the messaging service of the application.
Telegram announced that their Telegram crypto-asset will be launched in two different stages where the first one would require the users to purchase the Contractual Rights for the acquisition of the Grams whenever they are launched and made available to the public.
The second process would involve the sale of the Gram coins themselves. Grams have labeled this process as the SAFT that stands for Simple Agreement for Future Tokens.
This is where the U.S. regulators who are commonly known as the Securities and Exchange Commission (SEC) made their entrance, who Telegram knew would treat the contractual rights as the securities. In the United States, selling securities is illegal and in order for any firm to perform this activity, they are required to register the sales with SEC or being exempt from such registration processes would also allow them to do their sales. As a result, the sales were limited only to the investors who were verified accredited or exempt from such registrations in order to make the purchases.
This is why Grams were only in the reach of the wealthy individuals or the ones who had the legal right to buy those contracts. Even with such obstructions, the first stage raised around $1.7 billion for Telegram. However, just when they Telegram was ready to launch its second stage of releasing the Grams, the Securities and Exchange Commission (SEC) made their move, lodging a complaint against Telegram in the federal court. At this point, the court put a temporary halt in the operations of Grams’ second stage before the matter could be settled.
In their defense, Telegram stated that it had adhered to the U.S. law’s legal requirements and registered their contractual rights and stated that Grams would not be securities. However, the SEC presented their rebuttal that Telegram’s sole motive is to distribute Grams and these were neither registered nor exempt from registration.
In the light of the above, the decision was in SEC’s favor and the entire scheme for Telegram to distribute Grams was abandoned. Telegram ended up paying to agree to pay $18.5 to SEC as a fine and would eventually return $1.2 billion out of the $1.7 billion back to the purchasers.