The Commodity Futures Trading Commission (CFTC) has officially been roped into the ongoing feud between the Securities and Exchange Commission (SEC) and mobile messaging company Telegram over the latter’s cryptocurrency and blockchain projects.
According to a recent report, the Southern District Court of New York sent a letter to the financial watchdog last Monday, asking the agency to give its opinions on the legal status of Telegram’s digital asset. While the better itself didn’t expressly specify the details that the CFTC is to give its opinions on, Finance Magnates explained that the agency would be tasked with providing answers to the central question in this feud- whether or not the GRAM token is a security or not.
The $1.7 Billion Question
The question has so far been one of the most important as far as the legal status of cryptocurrencies within the United States’ financial framework is concerned. As at the time the SEC started the battle, it maintained vehemently that the GRAM token is a security, essentially flagging the London-based tech giant for violating the Securities Act of 1933 by not disclosing the fact that it was releasing a “security.”
However, Telegram has also remained resolute in its stance, claiming that the GRAM token is a commodity and thus isn’t covered by the securities regulation- or by oversight from the SEC.
After several filings, that central question has remained unanswered, and there are many who believe that the resolution to this case will determine how the SEC could get to treat digital assets being developed from here on out.
Now, a separate financial regulator could help swing the momentum of the battle to either side. “The Office of General Counsel of the United States Commodities Futures Trading Commission is respectfully invited to express its views on the issues presently before the Court in the above-captioned action in which its interests may be implicated. Leave is granted to file a written submission, which may take the form of a letter,” federal judge Kevin Castel said, according to Finance Magnates.
SEC’s Barrage of Attacks Continues
For now, however, the SEC has continued its onslaught on Telegram and its crypto projects, going as far as attacking the worth of the GRAM token and the development of the Telegram Open Network.
In a filing sent to the court two weeks ago, the agency called the GRAM token worthless, explaining that Telegram had conducted “a two-step around the registration provisions” and fabricated the difference between a purchaser’s investment in the digital asset and the delivery of the asset itself.
Essentially, the agency claimed that Telegram had given a weak argument about the GRAM’s existence, since it never really had any tangible value.
“Telegram’s attempt to avoid this economic truth by labeling Grams ‘commodities’ also fails. Grams are not commodities. Unlike gold, comic books, and Krispy Kreme donuts — commodities Telegram compares to GRAMs — GRAMs have no intrinsic value,” the document ended rather sarcastically.