The United States Securities and Exchange Commission (SEC) is stepping up its fight with the mobile messaging platform Telegram over the issuance of the latter’s planned crypto project, and the regulator is now calling on some key figures to testify in the 2020 hearing.
According to documents filed with the U.S District Court for the Southern District of New York on December 6, the SEC has asked the High Court of England and Wales to compel John Hyman, the former Chief Investment Advisor for Telegram, to make an appearance at the GRAM token hearing.
GRAM: Utility or Security?
The hearing in question is in relation to the planned GRAM token listing, which was originally supposed to happen towards the end of October. Everything seemed set for the company to launch the token and the Telegram Open Network blockchain at the planned date, but the SEX promptly swooped in about a week to the launch and ordered for the project to be temporarily shut down.
According to the financial watchdog, the GRAM token is qualified as a security, and by issuing its Initial Coin Offering without proper notification, Telegram had directly violated the Exchange Act of 1933. The regulator pointed out that while it could have requested an exemption from registration under Regulation D, this wasn’t sought.
“Instrumental” Hyman Has Been Elusive So Far
Per the new filing, the SEC wants to get a testimony from Hyman, as they believe he was an instrumental figure in the ICO that earned Telegram a reported $1.8 billion across two token sales. Human reportedly communicated with over a dozen investors in the TON, and per the documents, Telegram chief executive Pavel Durov has once described him as the person who “runs the distribution of Grams.”
What the financial regulator wants is for legal authorities in the United Kingdom to issue a Letter of Request for Hyman to be deposed, since he is a citizen of the Kingdom and primarily lives there. However, apart from a verbal testimony, they will also be looking to get documents and transcripts of his communications with the investors in question, the details of his employment while at Telegram, and details concerning his own investment in the GRAM token.
The SEC attorney claimed that they had reached out to Human previously, and he was willing to appear for a voluntary deposition. However, his attorney subsequently refused to return several calls and testimonies over the planned deposition. It is possible that he has been in contact with his former employees, and the watchdog is now seeking to get him at all costs, even if it means going through the courts.
The battle between both parties is undoubtedly heating up, and for good reasons. The SEC has taken a particularly strong stance on crypto projects of this nature being launched, and has been doing all it can to ensure that companies issuing tokens fall in line with existing securities laws.
On the other hand, there are those who strongly believe that the agency is overreaching in its authority. Undoubtedly, the outcome of this case will have implications for tokens being launched going forward.