Crypto exchanges are embroiled in SEC lawsuit against Telegram

Lawsuits show that at least one crypto exchange planned to list Gram tokens before the U.S. securities and exchange Commission halted the launch of the TON blockchain.

According to documents filed with the SEC court, the Agency received a registration form entitled "circle asset list Form." According to the form, it was filed requesting a listing on the circle crypto exchange, Poloniex, and submitted by Sergey Vasin, chief operating officer.

In the form, Vasin said he was acting chief operating officer of Gram Vault, a cryptocurrency custodian who claims to have led most investors to sell Telegram tokens in 2018 and plans to hold tokens on behalf of those investors.

Asked how he was connected to the project, Vasin said he was "the chief operating officer at Gram's largest token repository (75% from the second round and 50% from the first)" and added that " Telegram itself has no intention of working with exchanges."

In telegram's subpoena, the SEC requested information on possible Gram trading on Coinbase, Poloniex, Bittrex, Huobi, Binance, Blackmoon Crypto and Liquid.io - the last two have previously announced that they plan to hold a listing of this token. Coinbase also recently announced plans to offer storage of Gram tokens.

In the form, Vasin listed the core members of the TON team, including brothers Pavel and Nikolai Durov, and said that "about 20 core developers are working on the TON project, as well as some outside teams, including Ton Labs," an investor-led TON that develops tools for TON developers and validators.

As a value proposition TON Vasin called 300 million users of Telegram and solutions for scaling, calling one of the competitors of the Ethereum project.

Interaction with SEC

The SEC sued Telegram on October 11, demanding to stop the launch of the telegram Open Network (TON) blockchain project and return funds to investors for tokens distributed in private tokensales in February and March last year.

The SEC cited Telegram's lack of cooperation with the regulator, pointing out that "the company refused to comply with the SEC's subpoena" as an argument to the court about why it should suspend its operations. However, the lawsuits show that Telegram communicated with the SEC over the summer and before the network's launch, which was scheduled for late October.

In a document titled "Fourth supplemental Memorandum for securities and exchange Commission employees," which was filed in court by the company's lawyers and dated July 25, Telegram provided details about the upcoming token sale and conducted several data updates throughout the year.

"During our staff meeting on July 18, 2019, we offered to provide this document summarizing key aspects of the TON blockchain," telegram wrote, adding that the memo followed four others previously sent to the SEC. The dates of these letters were June 26, 2018, November 20, 2018, February 27, 2019, and March 18, 2019.

The company also proposed a move to make Gram not considered securities by proposing to change the functions of TON Reserve, the project's Treasury: in an email addressed to investors after the SEC lawsuit, Telegram said it had been interacting with the Agency for more than a year, including registering two proposals under Regulation D in February and March last year.

In the subpoena, the Agency requested a wide range of documentation from Telegram, including all communications with investors, exchanges and potential custodians of assets. The securities and exchange Commission wanted to know the full list of investors, the current status and details of the use of funds received by Telegram in the sale of tokens, and how Telegram made sure that investors plan to actively use Gram rather than hold them as securities.

In response to the SEC, Telegram's attorney, Alexander Dreilevsky, said that providing all the requested information would violate the confidentiality of Telegram's relationship with investors: "We are ready to meet and discuss these requests, which, as you know, entail serious data privacy concerns."

Court hearings to decide the fate of the project in the US were previously scheduled for October 24, but were later postponed to February 18-19, 2020.

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